What is the Procedure To File Bankruptcy Easily?

A debtor has to face a harrowing time while dealing with creditors when he or she is neck deep in debt. Thankfully, it is possible to opt for bankruptcy to get relieved from all types of debts and start with a clean slate. However, recent change in laws has made filing bankruptcy pretty tricky. Hence it is essential that one gets complete information about filling bankruptcy and its pros and cons. Following few lines will help you in understanding the process.

When bankruptcy is filed, an automatic stay is granted, which prevents the creditors from attempting to collect their money or seize the assets of the debtor. Partial or complete relief from debts might be granted by the court. Going for it can be considered in the following situations:

• You have been unemployed for long and can no longer collect unemployment benefits
• Your creditors are considering to sue you or have already done that
• You fear your home getting repossessed

Hire an experienced lawyer

Filing bankruptcy is not straightforward at all and it involves a great deal of complicated paperwork. If you fail to perform the correct paperwork, your case will be thrown out in a jiffy. You may want to hire an experienced lawyer to help you out in filing bankruptcy. Owing to the intricacies involved in the process, you need to opt for someone who has sufficient experience in helping individuals in filing the same in the past.

Check the fees

Your lawyer is going to charge some amount for his or her services, which can be either a flat fee or an amount depending upon the debt. Mostly, it is better to go for a lawyer who charges a flat fee. The lawyer’s fee needs to be paid well in advance as your lawyer cannot be your creditor under chapter 7 for bankruptcy. You may enter into an agreement with your lawyer and pay his or her legal fees at a later point of time.

Then there are the court filing fees, which are around $200 in most of the cases. This fee needs to be paid within a reasonable period of time after filing bankruptcy.

Types of bankruptcy

Chapter 7 bankruptcy: Chapter 7 bankruptcy is the most common type of bankruptcy. It involves complete cancelation of debts and the individual filing for Chapter 7 bankruptcy can keep the protected properties. However, the property which is not exempt from waiver needs to be handed to the creditors.

Chapter 13 bankruptcy: Chapter 7 bankruptcy involves setting up a repayment plan, which can be between three to five years. You will have to pay back your creditors complete due amount within this period. Most new individuals are forced to file for Chapter 13 bankruptcy.

You will undergo credit counseling, where you will be provided consumer credit counseling by a court appointed entity. Here, your eligibility for filing a particular type of bankruptcy will be checked. Your lawyer should assist you with every aspect of your training.

Complete the filing:

After the specifications of your filing have been agreed upon, your lawyer will file bankruptcy petition on your behalf. You will be asked to attend a meeting with your creditors, when they will ask questions and you will have to provide truthful answers to everyone’s queries.

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What is Wage Garnishment and What Are its Limitations?

Wage garnishment applies to some amount of the wages that an employer would need to withhold as repayment for debt of an employee. The same amount is handed over to the creditor. Wage is garnished when a person who owes debt is unable or unwilling to pay back the due amount as per the agreed upon payment terms. For many creditors this is one of the most potent ways of recovering their bad debts. Wage garnishment can also be one of the last resorts for the debtor to pay back the due amount.

IRS is one institution that regularly uses this to recover its dues. Apart from IRS wage garnishment can also be used by state governments, private creditors or even ex-spouse demanding alimony or child support. In addition to garnishing for taxes, federal and state governments can seek to attach wages if a person defaults on government-backed student or business loans.

However wage cannot be garnished without obtaining a court order. For this the lender will have to file a lawsuit and once the judgment in the lender's favor they can more to the employer and can have a certain portion of the wage garnished to cover their debt along with the interests. In case the employer fails to garnish the wages they are held accountable and have to pay the due amount. However some creditors can garnish wages without obtaining a court order and they include the IRS and the Department of Education. They can set notices to employers to start garnishing wages as soon as they take up any case.

Limitations of Wage Garnishment

Wage garnishment laws and their clauses can differ from state to state but they have the same clauses on most occasions. Let us take the wage garnishment laws in California and take a look at the limitations of that these laws have. In his regard the Federal law has strictly limited the amount of money that can be garnished from a paycheck. According to this law the state must provide as much protection to the debtor as the Federal law does. They can provide more protection to the debtors as per their discretion.

There have been recent amendments to the wage garnishment laws in California and effective July 1, 2013 law in California offers more protection to the debtor than the Federal law. If a debtor earns the minimum wage as specified by the law or close to the minimum wage there are strict limitations that the courts need to adhere to while deciding on a case of wage garnishment. The creditors are allowed to garnish less than 25% of the debtor’s disposable income for any workweek or the amount by which a debtor's weekly disposable earnings exceeds 40 times the state hourly minimum wage. The current minimum wage per hour is $8:00. Also disposable income is calculated after all the necessary deductions as mandated by the law.

If you are likely to face wage garnishment it would be advisable that you immediately get in touch with an attorney who would advise you with your case and how to avoid wage garnishment.

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How to Prevent Wage Garnishment Before it Starts?

IRS can be notorious at time when it comes to collecting taxes. If you owe back taxes or unfiled tax returns one of the ways in which they can recover these dues is through wage garnishment. In fact this is the most popular force collection strategy that is adopted by IRS. Your employer must adhere to their instructions or IRS would make them liable for the amount due. In case you wage isn’t garnished you and your employer are immediately sent legal notices. Once the wage garnishment process starts it is very difficult to stop it. So the ideal way to stop wage garnishment is to avoid it in the first place. Here we shall discuss a few ways in which you can stop wage garnishment before it starts.

• Install Payments -There is a policy of the IRS where they allow you to pay back their dues in installments instead of garnishing your wage. This is applicable when you aren't being able to pay the taxes and your outstanding taxes and penalties are less than $50,000. In such a case you can suggest an installment to the IRS. The due taxes and penalties are considered a loan from the IRS. They will charge you a small administrative fee and also interest which is much less than what you pay for your credit cards. You can visit their website and apply for an installment plan online. Once accepted it saves you from the ordeal of wage garnishment.
• Offer in Compromise - This is another way in which you can avoid wage garnishment by the IRS. Here you will need to prove them that you are not in a position to pay the full amount that is due. Along with this you can make an Offer in Compromise (OIC). Once this is settled IRS might revise your taxes and penalties to an amount that you are able to pay. However before you opt for this you need to go through all the terms and conditions carefully and not just try and think of this to be a loophole that you can exploit. There are great chances that your case would be rejected.
• Poverty - You can take this step after you have received your wage garnishment letter and before the garnishment has started. In this case you will need to make a claim that you are too poor to make any payments to the IRS and wage garnishment would deny you the basic necessities of life. In many such cases the IRS would hold up your wage garnishment for some time. However once your situation has improved IRS would come back to haunt you. So this step gives you merely temporary respite if you haven't thought of an alternative.

To avoid wage garnishment and forced collection from the IRS you would need to take advise from a professional tax attorney. He or she will study the minutes of your case and come out with a solution that prevents your hard earned wage from being garnished.

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How Personal Loans are Helpful to Pay Your Debt with Minimum Interest Rates?

Having a huge debt is like entering a vicious cycle as it takes a lot to come out of it. When you have multiple debts to care about it can be quite a challenging task to clear all of them without compromising with the basic needs of your life. High rate of interest adds to your woes as you will be paying of huge sums of money as merely interest. One of the best ways to pay all your debts at minimum interest rates would be to opt for personal debt consolidation loan. This is a tried and tested formula that has helped debtors clear off huge sums of debt.

Personal debt consolidation loans are like any other personal loan with the only difference that they merge or consolidate all your existing loans into one. For instance you might be having different loans to take care of such as auto loan, student loan, credit card loans, house mortgage and other loans. Here you can avail a personal loan at low interest rates helping you pay back all your debts at minimum interest rates. Here you will need to pay interest only on the debt. Such loans can be availed for a period ranging from 5 to 25 years however this period may vary at the discretion of the lender.

Secured And Unsecured

Personal debt consolidation loans are available both secured and unsecured forms. If you are planning to avail secured personal debt consolidation loan one of your properties will have to be pledged as collateral. By doing so, you can avail these loans at low interest rates. On the other hand you can avail an unsecured personal loan with no collateral but in such cases you should be prepared to pay a higher rate of interest as this will cover the lender’s risk factor involved.

Advantages of Personal Debt Consolidation Loans

• Lower Payment Amount - As we have discussed earlier due to the lower rate of interest you will have to pay a much lower amount compared to paying all your loans at higher interest rates. Also this might help you write off all your debts in a shorter period of time.
• Availability - There is intense competition among lenders and thus you can strike a good bargain availing such a loan. With a few mouse clicks you will be able to get free quotations for dozens of lenders and compare all their terms and conditions to zero one that is most beneficial to you.
• No Credit Check - To avail a personal loan debt consolidation you don’t need to undergo credit check. If you have a poor credit score you won’t be able to avail most loans as a credit check is mandatory. However in this kind of loan you don’t have to undergo any such checks. However lenders might charge higher interest rates to cover their risks.
• Convenience - Since you will be merging all your debts into one it adds to your convenience factor. You won’t have to make multiple payments every month instead you make a single payment which is also less frustrating.
• Tax Deductible Interest - There are some personal debt consolidation loan where the interest that is paid on the loan is tax deductible.

There are a number of banks and financial institutions that offer you such kinds of loans and you can easily avail them. It would be wise to seek the help of a loan consultant before availing personal debt consolidation loans as they will guide you in choosing the right kind of personal debt consolidation loans that suits your needs.

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