Debt Settlement Explained in a Nutshell

Debt settlement is a debt relief option available to consumers in America. A debt settlement program is a very powerful and aggressive form of debt relief meant to relieve debtors within three years. There are many companies ready to help consumers negotiate with their creditors. Here’s a step-by-step explanation of how these programs work:

  • The client enrolls their debts into the program.
  • The company opens a trust savings account in the client’s name.
  • The client makes one monthly payment for all of the debts combined into the savings account.
  • The company’s arbitrators negotiate with the creditors when there is enough money saved.
  • After one card is paid off, the cycle repeats until the program period has passed – the client continues making payments into the savings account and the arbitrators negotiate when funds are available.

Once your debts are paid down, make sure you stay current on your secured loans like mortgage payments and auto loans because they’ll help improve your credit score tremendously and within a year or two your credit score will be in the 700s allowing you to apply for loans and lines of credit while keeping the interest rates low and somewhat reasonable.

Debt settlement is one of the most powerful tools available for consumers today. It’s the most aggressive approach to relieving debt and should be used for relieving legitimate financial and medical hardships. Always remember, before putting your trust with any company, make sure they have a high rating with the Better Business Bureau and an impeccable proven track record.

Proof of Claim Objections in United States Bankruptcy Court

A proof of claim objection in United States Bankruptcy Court is the topic of this article. The United States Bankruptcy code provides that any party in interest may file an objection to a proof of claim filed in a Bankruptcy case. All debtors in Chapter 13 cases are considered a party in interest and therefore have the right to file an objection to any proof of claim filed in their case. Debtors in other cases such as Chapter 7 may or may not be considered as a party in interest depending on the unique circumstances of their case.

It is vitally important to properly object to any claims filed in a Bankruptcy case that is not timely filed, is defective for failure to comply with Bankruptcy code requirements or is defective in any other way or relates to any debt the amount or existence of which is disputed. The reason for this is that Bankruptcy law states that unless a party in interest objects any claim filed is deemed allowed.

It is therefore critical that all proofs of claim filed in any Bankruptcy case be carefully reviewed to determine if there are valid grounds for filing an objection. The pertinent law is 11 U.S.C. § 502(a) which states in pertinent part that, any claim filed “is deemed allowed, unless a party in interest… objects.” The burden is on the party filing the objection to prove to the Court that the claim is not valid and should not be paid.

In particular a debtor or their attorney should carefully review any proof of claim filed to determine if the claim was timely filed as Federal Rule of Bankruptcy Procedure 3002(c) requires most proofs of claim to be filed no later than 90 days after the first date set for the meeting of creditors called under § 341(a) of the Code.

It should be noted that Federal Rule of Bankruptcy Procedure 3001 contains numerous detailed requirements for each specific type of proof of claim and the proof of claim should be carefully reviewed to determine if it meets the strict requirements of Rule 3001.

Any objection to a proof of claim should be filed and served as soon as it has been determined that there are valid grounds for filing an objection.

Some of the more common grounds for objecting to a proof of claim are:

The creditor failed to attach sufficient documentation to prove that a debt is owed;

The amount of the claim is incorrect;

The same claim was filed more than once;

The claim was not filed in a timely manner;

The classification of the claim as secured or priority is incorrect, and

The claim states improper interest amounts or fees.

Anyone wishing to view the entire text of any of the Federal Rules of Bankruptcy Procedure cited in this article or any other pertinent rules can visit: https://www.law.cornell.edu/rules/frbp

Secured And Unsecured Loans In Bankruptcy

When it comes to taking out a loan, you should know they are not all the same. There are many types of loans and the terms and conditions of a loan can vary greatly. Different types of loans each have their own benefits and risks. The terms of a secured loan can be stricter than an unsecured loan. One of the main differences between these two types of loans is how debt collection efforts are handled in the event you default on your loan payments. Your debt repayment options may be managed differently in a secured loan than an unsecured loan. In the event of an extended financial hardship, you may not be eligible to have certain types of loans eliminated through bankruptcy.

Secured Loans

Most major loan purchases, such as your home or car, are called secured loans. They are called secured loans because the debts acquired under this type of loan are secured against collateral. A mortgage loan is considered a secured loan. In a mortgage loan, the lender has the right to repossess the home if you default on your payments. Defaulting on a mortgage loan can lead to foreclosure, whereby the lender takes over the rights to the home and may sell the home in order to satisfy the debts owed. Loans for car purchases are also secured loans. The lender can repossess your car and sell it to recover the loan amount. If the sale of the asset does not satisfy the full amount of the debt that is owed, you may still be held liable for repaying the remaining amount owed on the debt.

A personal secured loan is one in which you are using your home or car as collateral, but the money received in the loan is used to purchase other items. An example of a personal secured loan is a payday loan, in which you put the title to your car as collateral against the loan. Even though the loan is not used for the purchase of the car, the lender has the right to repossess the car if you default on repaying the loan. If your car is repossessed during a payday loan, you are still liable for any debts still owed on your car loan through the originating lender. This can lead to further financial trouble and more debt.

Secured Loans And Bankruptcy

Secured loans can be more difficult to manage when if you find yourself in financial trouble. A secured loan may not be eligible for elimination if you file for bankruptcy. In some cases, a Chapter 7 bankruptcy can eliminate the debt owed on a secured loan, but you may risk losing the property to the lender. Legally, lenders are allowed to seize and liquidate some of your assets in order to fulfill the debt payments of a secured loan. However, there are many states whose bankruptcy laws may offer exemptions for some of your assets. Bankruptcy exemptions may allow for your home and car can be protected from liquidation during bankruptcy. A Chapter 13 bankruptcy can protect your assets from liquidation through a Chapter 13 repayment plan. The repayment plan allows for you to keep your assets while you make payments towards the loan over the course of 3 to 5 years. Once you complete the repayment plan, you will be relieved of your loan debt and own the rights to the property.

The most important thing to remember about defaulting on a secured loan, is that time is crucial for protecting your assets. Once you realize you may not be able to make your payment, contact your lender and discuss negotiating a modified repayment plan. Many lenders prefer to modify a repayment plan that better suits your budget, than risk losing money through selling the property through foreclosure or repossession. If your lender is not willing to negotiate, seek counsel from a qualified bankruptcy attorney.

Unsecured Loans

Unsecured loans are loans that do not have any collateral used against the loan. The loan is unsecured because it is based on your promise to repay the debt. In an unsecured loan, the lender is not given any rights to seize or liquidate a specific asset. If you default on the loan, the lender may make debt collection efforts but are not afforded the right to reclaim any of your property.

The most common type of unsecured loan is a credit card. Defaulting on a credit card may lead to collection efforts, but creditors cannot take your assets to pay for the debt. Some personal loans are considered unsecured loans if you did not put up any of your property as collateral for the loan. Defaulting on unsecured loan payments can lead to negative consequences such as damage to your credit, harsh collection attempts and legal action. Another example of an unsecured loan is a student loan. Generally, student loans are treated seriously by the lending institution and defaulting on such loans can lead to significant consequences. Federal bankruptcy laws do not protect borrowers that default on a student loan payment and you risk having your wages garnished for purposes of paying the debt owed.

Unsecured Loans And Bankruptcy

Unsecured loans are much easier to have discharged through bankruptcy than a secured loan. A Chapter 7 bankruptcy can eliminate most of your unsecured debt. In some cases, the bankruptcy court may decide to allow for some of your assets to be liquidated to fulfill debt payments. However, bankruptcy laws offer exemptions to protect most of your assets in bankruptcy. As in a secured loan, a Chapter 13 bankruptcy will protect your assets as you make payments towards the debt.

Your debts are your responsibility, whether they are secured or unsecured loan debts. Although bankruptcy allows for debt relief when experiencing financial hardships, this assistance should not be abused. It is always best to repay your debts in full to prevent any further damage to your credit history and to maintain a good financial standing. However, good people may experience tough times. Bankruptcy can provide relief from your debts and protect your assets, but it is best to be properly advised about your financial situation before you decide to pursue bankruptcy. A qualified bankruptcy attorney can review your options and help you make the decision to put you on the path to financial stability.

Bankruptcy Credit Counseling

If you are in a bad financial situation where you feel there is no hope for you to recover,  bankruptcy  might be your only option. People who have lost a job or don’t have enough income to cover all of the growing expenses may need to consider the different options that they can take. If you are going to apply for  bankruptcy , you may be required to get  bankruptcy  counseling before you can file.

Most courts will require people who are applying for a  bankruptcy  to get a  bankruptcy  credit counselor. These counselors will need to be approved by the court. If you fail to meet the requirement of getting a  bankruptcy  counselor, you may have to start the approval process all over again. Even if your  bankruptcy  is not a result of financial mismanagement, counseling is often required by the courts.

Most courts will give you a list of different credit counselors that are approved. Before you see a counselor your need to make sure they are approved by the courts. You can often get the courts to approve most counselor you choose; you just need to contact them.

A  bankruptcy  counseling service will help teach you different skills to help avoid you getting into the same bad credit situation. They can go through all of your debt with you and see if there are any ways that you can recover your financial situation without going through a  bankruptcy  process.  Bankruptcy  credit counseling is a good thing to do before you decide to file for  bankruptcy  because it will show you some different alternatives to  bankruptcy .

Credit Repair – The Truth And The Myth

Credit Repair – Fact or fiction?

In this world of television and internet it’s very difficult at times to decipher truth from fiction. Also, due to the speed at which information travels word gets around at an astonishing rate (whether good or bad). One of those subjects that have gotten negative press lately has been the credit repair industry.

You have heard things like, “Start a new credit file today!”, or “Improve your FICO by 300 points!”. But, you have also heard many negative things. Some of them related to those two sayings above. First, I would like to separate fact from fiction.

Fact

You can repair your own credit. You can also hire someone to help you repair your credit. But let me explain the difference between the two. First, hiring a specialist could cost you hundreds if not thousands of dollars with “no guarantee” that anything will be fixed. Also, there have been many so-called specialist giving out illegal repair information!

The truth is that many times you will be asked to dispute everything on your credit file as erroneous. Now, 80% of information reported to the three major credit bureaus (Trans Union, Experian, & Equifax) is erroneous information. But, according to the FTC this is fraud, which is against the law.

The truth is you do not need a credit repair company or any specialist within an industry (legal or otherwise) to help you repair your own credit. You have within your hand the ability to self repair your credit. With only a small time investment you can repair your own credit.

Repair Myth

The myth is simple, that you cannot repair your own credit. This has been a myth perpetuated by unethical individuals who have marred the credit repair industry. Are all credit repair specialist like this? No, they are not. Some are very professional, courteous and honest. They do not ask for funds before the repair has taken place and will assist you with your credit repair needs.

However, you can repair your own credit. There have been recorded instances of credit repair companies telling their clients not to go directly to the credit bureaus (when it is your right to do this). It is also your right (according to the FTC) to receive a free annual credit report (of all three major bureaus).

As you can see, there are excellent resources available (directly from the Federal Trade Commission) to assist you in your credit repair needs.

Credit Truth

In conclusion, you have the right to repair your own credit. Repair is not fiction or myth, but truth that can change your life for the better.