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Personal Bankruptcy Archives

Bankruptcy debt relief can result in greater credit opportunities

The subject of bankruptcy conjures up several myths that are unsupported by fact but which persist both nationally and in Arkansas. These myths about bankruptcy are often created by groups that have vested interests in preventing bankruptcy debt relief. A federal reserve bank in another state has published a report that may finally stifle the false perceptions about bankruptcy relief created by some banks, creditors, credit counseling agencies and debt relief companies.

Celebrities may file bankruptcy in hard financial times

Bankruptcy has been used by many well-known entrepreneurs and celebrities over the years, including some from Arkansas. The fact is that even the rich and famous may be vulnerable to falling into bad economic times or making hugely unwise business decisions or investments. Bankruptcy law is flexible enough to accommodate a wide variety of personal and business financial crises.

Medical debt is usually wiped out in a Chapter 7 bankruptcy

Some observers believe that medical debt is the biggest cause of bankruptcy filing in the country and in Arkansas. According to one national agency, there are some 43 million persons with unpaid medical debt on their credit reports. The probable reason that many with burdensome medical debt file bankruptcy is that it is fairly easy to discharge unsecured debt in a liquidation proceeding under Chapter 7.

Discrimination against bankruptcy peitioners is prohibited

It is a little known fact that a federal law, which is applicable in Arkansas, forbids discrimination against someone who has a completed bankruptcy on his or her record. The protection applies to job applications, requests for student loan benefits or other applications for public or private benefits made by an individual with a bankruptcy discharge. However, the federal law provides more protection against discrimination when seeking assistance from government agencies than it does when pursuing private assistance.

There are 2 general types of bankruptcy for consumers

Despite the dark predictions that are often put out there regarding bankruptcy as an option to cleaning up a drastic debt situation, the truth is that the positives often outweigh the negatives when a frank evaluation is made. The purpose of the federal statute is to allow qualified persons in Arkansas and elsewhere to either eliminate or reorganize their debt, and then move on to a new start free from prior unmanageable burdens. There are essentially two kinds of bankruptcy, liquidation and reorganization.

Debt relief through bankruptcy gives consumers a fresh start

There are several reasons why consumers in Arkansas may find it necessary to choose bankruptcy to get out from under a crippling debt load. Reasons commonly cited for bankruptcy filings include credit card spending, unexpected medical expenses, losing a job and disability. Consumers who choose to get major debt relief by filing for bankruptcy are often industrious, hard-working individuals and married couples.

Bankruptcy offers debt discharge, but are those debts discharged?

Some Arkansas consumers who went through personal bankruptcy with good intentions to start over and avoid previous errors may have been disillusioned. State and federal officials recently reported that thousands of consumers who were promised the protection of bankruptcy and discharge of some debts remain to be persecuted by debt collectors. It was reported that many banks willfully fail to update credit reports after debts have been discharged.

Retirement plans and IRAs are protected in bankruptcy

Since 2005, it has been clear in Arkansas and elsewhere that a person filing a personal bankruptcy would be able to keep his government qualified retirement funds, including personal IRAs, despite the bankruptcy. Some plans had been protected from bankruptcy liquidation even before that through a number of court cases, but it remained unclear which types of funds would be exempt. Additionally, as a general rule personal IRAs were given no protection. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) clarified the matter by statute, making virtually all government-recognized plans and personal  IRAs exempt.

Chapter 7 bankruptcy does not stop later mortgage approval

Arkansas and other states are seeing that some persons who lost their homes and filed bankruptcies for debt relief during the recession are now back and applying for new mortgages. In fact, although a Chapter 7 bankruptcy can be reported for up to 10 years, a mortgage for a home purchase can be obtained sooner than that. It depends largely on how well the consumer has done in repairing his credit score.

Business owner may qualify for credit after bankruptcy discharge

A bankruptcy filing in Arkansas or elsewhere does not necessarily foreclose the filer from obtaining business financing within a few years of the bankruptcy discharge. You can erase a large amount of debt in a bankruptcy and still be qualified for a small business loan under certain circumstances. Thus, if you keep a clear credit record after the bankruptcy and present a well-supported business plan, along with the existence of some collateral, a loan will have a fair likelihood of being approved.