Alternatives to Bankruptcy Chapter 7 & Chapter 13
Use our Debt Settlement Process as a Bankruptcy Alternative for all of your Credit Card Debt.
First Choice Debt Resolution is devoted to helping Americans avoid Bankruptcy and stop Collection Calls. Our Debt Settlement Process helps consumers lessen the financial burden and become Debt Free by using Debt Negotiators trained by the International Association of Professional Debt Arbitrators. Typically, clients become free of credit card debt within 36 months and can save up to 65 percent of their original balances. Feel confident with a company who complies with the United States Organization for Bankruptcy Alternatives.
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Debtors should be aware that there are several alternatives to chapter 7 relief. For example, debtors who are engaged in business, including corporations, partnerships, and sole proprietorships, may prefer to remain in business and avoid liquidation. Such debtors should consider filing a petition under chapter 11 of the Bankruptcy Code. Under chapter 11, the debtor may seek an adjustment of debts, either by reducing the debt or by extending the time for repayment, or may seek a more comprehensive reorganization. Sole proprietorships may also be eligible for relief under chapter 13 of the Bankruptcy Code.
In addition, individual debtors who have regular income may seek an adjustment of debts under chapter 13 of the Bankruptcy Code. A particular advantage of chapter 13 is that it provides individual debtors with an opportunity to save their homes from foreclosure by allowing them to "catch up" past due payments through a payment plan. Moreover, the court may dismiss a chapter 7 case filed by an individual whose debts are primarily consumer rather than business debts if the court finds that the granting of relief would be an abuse of chapter 7. 11 U.S.C. § 707(b).
If the debtor's "current monthly income"(1) is more than the state median, the Bankruptcy Code requires application of a "means test" to determine whether the chapter 7 filing is presumptively abusive. Abuse is presumed if the debtor's aggregate current monthly income over 5 years, net of certain statutorily allowed expenses, is more than (i) $10,000, or (ii) 25% of the debtor's nonpriority unsecured debt, as long as that amount is at least $6,000. (2) The debtor may rebut a presumption of abuse only by a showing of special circumstances that justify additional expenses or adjustments of current monthly income. Unless the debtor overcomes the presumption of abuse, the case will generally be converted to chapter 13 (with the debtor's consent) or will be dismissed. 11 U.S.C. § 707(b)(1).
Debtors should also be aware that out-of-court agreements with creditors or debt settlement services may provide an alternative to a bankruptcy filing.
What can Bankruptcy do to my Credit?
Both the Bankruptcy Code and the Fair Credit Reporting Act (which regulates what a consumer reporting agency may include in your credit report) are Federal law, so the same rules apply to all states.
A consumer credit report may include information on a Chapter 7 and Chapter 13 bankruptcy for 10 years from the commencement of the case. We have been advised that at least one major consumer credit reporting agency removes information about Chapter 13 after only 7 years although it is not legally required to do so.
Most other credit information may be reported for 7 years, except for civil suits, civil judgments, and arrest records can be reported for at least seven years, but may be reported longer if the governing statute of limitations is longer. For example, in Arizona, a court judgment is effective for 5 years. However, it may be renewed at the end of that time for another 5 year period, and again after that period. As a result, a renewed civil judgment could be reported for as long as it is effective
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