Bank finance articles and tips

Many consumers are harassed by debt collectors every day. They can be intimidating and use fear to strike a sense of urgency in the debtor. However, dealing with creditors does not have to be like this and consumers have the right to protect themselves against unfair or abusive debt collection practices....

A Scottish trust deed normally runs for a period of three years; in the rest of the UK the broadly-equivalent IVA debt solution normally runs for five years. Sequestration in Scotland requires a £100 application fee; in the rest of the UK you'll need to find £700 to become bankrupt. The new Certificate for Sequestration in Scotland has unblocked the route to sequestration for many people that were previously trapped in debt. The Debt Arrangement Scheme in Scotland guarantees the freezing of interest and prevents legal debt recovery action against the debtor or their home; a debt management plan elsewhere in the UK provides none of these benefits. The politicians of Scotland appear to have designed and maintained a framework of debt remedies for Scottish residents that compares extremely well to the framework in the rest of the UK.

Chapter 11 of the United States Bankruptcy Code is available to both businesses and individuals to reorganize their debts. However, it is primarily used by businesses and is available to all types of legal entities from corporations to sole proprietorships.

Businesses or its creditors can file for protection under this section of the code when the business is no longer able to service its debt. The benefit is that the debtor retains control of business operations as a debtor in possession.

While maintaining most of the features of other bankruptcy chapters, going this route gives the trustee the power to operate the business. Unless disqualified for cause, the debtor ordinarily acts as trustee while overseen by the court....

Reserve struggles to create a plan to spur borrowing, bankruptcy debtors still have the opportunity to borrow money to buy homes. Let's take a look at how bankruptcy debtors can get a mortgage during or after bankruptcy:

After Chapter 7 Bankruptcy

A debtor is often able to obtain a subprime mortgage less than a year after their bankruptcy discharge. However, if they are willing to wait an additional two years they can often get prime mortgage rates or at least close to prime. FHA mortgages are available to Chapter 7 debtors two years after bankruptcy, while conventional loans are accessible after four years. If a Chapter 7 debtor has done an exceptional job in rebuilding their credit, they may be able to get a conventional loan only 3 years after their bankruptcy discharge. Three years is enough time to save a sizeable down payment and build the type of credit rating that can bring interest rates down significantly.

Long before recession caught the world in its grips, so many already lived in debt. The belief is that debt helps to fuel the economy. It is debt that enables society to pursue their quest for material satisfaction--to enjoy or have a taste of the good life. Debt does not respect social, age, economic or financial status of the debtor.

In economics, consumer debt is outstanding debt of consumers, as opposed to businesses or governments. In macroeconomic terms, it is debt which is used to fund consumption rather than investment. It includes debts incurred on purchase of goods that are consumable and/or do not appreciate. (reference)

When a debtor files a voluntary bankruptcy, a change in circumstances may occur which justifies dismissing the case. While it is rarely recommended that a debtor dismiss their bankruptcy case, there are some issues which can arise that justify a dismissal. Let's take a look at a few:

Job Changes

If a debtor files Chapter 13 bankruptcy they are doing so because they earn enough income to pay some of their unsecured debts and hold onto property attached to loans. Under a Chapter 13 bankruptcy plan, a debtor's income allows them to make monthly payments for three to five years until the terms of the repayment plan is satisfied. However, if a debtor's income decreases significantly or they lose their job, they may want to dismiss their bankruptcy case. A dismissal may be the best course of action if a change in income occurs before plan confirmation or before the debtor has begun making payments. However, if the debtor has already begun making payments on their debts they might prefer a conversion to Chapter 7 bankruptcy instead.