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Home » Business And Finance Articles » Bankruptcy 101 It Is 2006 Stay Informed

Bankruptcy 101: It is 2006, Stay Informed

The Basics

I know most of you know about bankruptcy, for those of you that do not, here are some basics. Generally, filing bankruptcy allows people who are having financial difficulties to wipe out their debts, which can provide them with a fresh financial start. There are several events that can take place to force people to take the path of filing for bankruptcy. Some events may include divorce, unemployment, lawsuits, foreclosures and credit card debt.

Bankruptcy serves two main purposes. It gives creditors a fair share of the money that debtors can afford to pay back and it gives debtors a fresh start. There are two ways in which bankruptcy can provide for payments to creditors and discharge for debtors: Chapter 7 and Chapter 13.

Chapter 7

Under this chapter, all unsecured debts are wiped out. These debts include credit card bills, medical and legal fees, utility bills and deficiency balances. Debtors can lose certain properties which the courts can sell and pay the proceeds to the creditors. There are some debts that cannot be discharged through this process. These debts include alimony, child support, some student loans, most taxes and debts resulting from fraud, larceny, debts and fines.

Chapter 13

This chapter is designed for people with regular income that want to pay their debts but are unable to do so. The purpose of this chapter is to help people, under court supervision, to work out a repayment plan with their creditors in which the creditors are repaid under a prolonged period of time.

Credit Card Solicitations

According to an article recently published in The New York Times by Timothy Egan, there is a woman who is a nurse and a single mother of two. She filed for bankruptcy before the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 because of her bad use of credit cards after her cancer surgery. As soon as she filed, she began to get two to three pre-approved credit cards in the mail daily. Now ask yourself, why would banking institutions and credit card companies want to attract consumers that have trouble paying off their debts? Bankers say it gives them a perfect opportunity to rebuild their credit. On the other hand, it also keeps consumers in a repetitive downward spiral of debt. Banks already know the risks of soliciting recently bankrupt consumers with a clean slate. That is why they offer them extremely high interest rates and even require a cash deposit on the card. This is why these consumers are an attractive market for credit lenders.

According to an article published in The Washington Post by Caroline E. Mayer, there is a yet-to-be-released survey of 356 debtors who filed Chapter 7 bankruptcy in 2001, 96 percent reported that they received offers for credit cards, car loans, mortgages and other credit the year after their debts were discharged. Half of the 96 percent received at least ten solicitations a month.

New Requirements

As of October 17, 2005, the new law also known as the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 makes it much more difficult for consumers to file for bankruptcy. This new law mandates enrolling in a credit counseling session before bankruptcy can be filed. People also have to complete a financial management seminar before bankruptcy is complete. The curriculum that consumers should be learning at these seminars is budget development, money management, using credit wisely and consumer information. Most of these classes will have a fee. Another critical change is "means testing." According to an article written by David A. Skeel Jr. on Bankrate.com, the means test is an effort to force more debtors to choose Chapter 13. Currently, roughly 70 percent choose Chapter 7. Any person with debt who is capable of repaying either $10,000 or 25 percent of what they owe to ordinary creditors, whichever is less, would be prohibited from filing Chapter 7. If a debtor has the means to repay a significant portion of his or her obligations within the next five years, the reasoning goes, he or she should be required to do so. The main effect of the means test is to raise the cost and bureaucracy of bankruptcy.

In addition, a few credit counseling agencies want to go above the requirements for credit counseling. "We want to go the extra step by offering free educational seminars, a financial literacy program and ongoing educational materials," says Jason Athas, Manager of Special Programs at Debt Management Credit Counseling Corp (DMCC). "We want our clients and potential clients to understand their mistakes and learn how to stay out of debt in the future." You can find out more information of the benefits DMCC offers at dmcccorp.org.

Conclusion

Most experts advise against filing for bankruptcy and recommend finding alternative ways to pay off debt. Consumers should try paying off their debts through a repayment program before choosing bankruptcy. These types of programs will teach the consumer the need to reduce expenses and save money.

Copyright 2006 Debt Management Credit Counseling Corp.

And here is another random article you might be interested in...

How PR Helps Fiercely Competitive Managers

Fiercely combative business, non-profit and association managers use every PR weapon they can lay their hands on. Which means they employ strategic, rapid-fire print and broadcast tactics every day of their business lives.

Still, many realize they need more than that to win the long-range battle. Fact is, they need a public relations budget that can deliver results far beyond publicity tactics.

The fierce and the smart know they need real behavior change among their most important outside audiences that leads directly to achieving their managerial objectives.

So they make sure they persuade those key outside folks with the greatest impacts on their organizations to their way of thinking, then move them to take actions that help their department, division or subsidiary succeed.

The really fierce use a public relations blueprint something like this one: People act on their own perception of the facts before them, which leads to predictable behaviors about which something can be done. When we create, change or reinforce that opinion by reaching, persuading and moving-to-desired-action the very people whose behaviors affect the organization the most, the public relations mission is accomplished.

If that's you, over time your results probably look like these: fresh proposals for strategic alliances and joint ventures; prospects starting to do business with you; welcome bounces in show room visits; membership applications on the rise; customers starting to make repeat purchases; community leaders beginning to seek you out; capital givers or specifying sources beginning to look your way, and even politicians and legislators starting to view you as a key member of the business, non-profit or association communities.

But the fierce ones don't go it alone. They make certain every member of the PR team agrees that it's crucially important to know how your outside audiences perceive your operations, products or services. Dig deep to ensure they REALLY accept the reality that perceptions almost always lead to behaviors that can damage your operation.

Now it's time to activate the PR blueprint and monitor and gather perceptions by questioning members of your most important outside audience. Ask questions like these: how much do you know about our organization? Have you had prior contact with us and were you pleased with the interchange? How much do you know about our services or products and employees? Have you experienced problems with our people or procedures?

Lucky for all of us, your PR folks are already in the perception and behavior business, so they can be of real use for this opinion monitoring project. Professional survey firms can be brought in to handle the opinion monitoring chore, but that can cost you a lot of money. So whether it's your people or a survey firm who asks the questions, your objective is to identify untruths, false assumptions, unfounded rumors, inaccuracies, and misconceptions .

Which of the above abberations is serious enough that it should become your corrective public relations goal? Clarify the misconception? Spike that rumor? Correct the false assumption? Fix those inaccuracies? Or yet another offensive perception that could lead to negative results?

With your public relations goal established, you can assure you'll achieve it by picking the right strategy from the three choices available to you. Change existing perception, create perception where there may be none, or reinforce it. But be sure your new strategy naturally compliments your new public relations goal.

So what will your message emphasize when you address your key stakeholder audience to help persuade them to your way of thinking?

Select your best writer to prepare the message because s/he must put together some very special, corrective language. Words that are not only compelling, persuasive and believable, but clear and factual if they are to shift perception/opinion towards your point of view and lead to the behaviors you have in mind.

Happily, the next step is easy. You select communications tactics to carry your message to the attention of your target audience. Making certain that the tactics you select have a record of reaching folks like your audience members, you can pick from dozens that are available. From speeches, facility tours, emails and brochures to consumer briefings, media interviews, newsletters, personal meetings and many others.

Keep in mind that HOW one communicates often affects the credibility of the message, so you may wish to deliver it in small getogethers like meetings and presentations rather than through a higher-profile media announcement.

You'll soon feel pressure for signs of progress. And that will lead to a second perception monitoring session with members of your external audience. Employing many of the same questions used in the first benchmark session, you will now be watching carefully for signs that the offending perception is being altered in your direction. Remember that you can always accelerate the program by adding more communications tactics as well as increasing their frequencies.

This bears repeating â€" yes, fiercely combative business, non-profit and association managers use every PR weapon they can lay their hands on, and that includes strategic, rapid-fire print and broadcast tactics.

But those same competitive managers also know they need an aggressive blueprint such as this one that will deliver behavior change among their most important outside audiences leading directly to achieving their managerial objectives.

end

Feel free to publish this article and resource box in your ezine, newsletter, offline publication or website. A copy would be appreciated at mailto:bobkelly@TNI.net. Word count is 990 including guidelines and resource box. Robert A. Kelly © 2004.