Aug

29

What About Tom’s Bankruptcy?

Posted In: Personal Finance

Let’s look at “Tom.” Tom is a hypothetical person. That means he’s fictional, not real. But, he’ll be good to use as as an example for this article.

So, imagine this scenario. Tom walks into work one day and finds that his company is planning a large scale layoff in the next week. Tom’s learns that due to a downturn in business, his entire division is being eliminated. As a result, Tom is going to be receiving his final paycheck in a few days and he has to find a new job. Quickly.

Imagine that Tom bought a house in 2006 and he has a $350,000 mortgage to pay off. Tom thinks he has more than $17,000 in credit card debt and he owes the bank more than $20,000 on his SUV. Even if he wanted to trade the SUV in, it will be difficult to sell the SUV for a fair price now that gas prices have increased and the number of SUVs on the market is much higher than normal. It looks like Tom isn’t the only one who doesn’t want to pay so much in gas.

Now that Tom is looking for work, his debts are increasing monthly. Next, Tom’s wife gets sick and she needs a stay in the hospital. Medical expenses add up quickly & Tom isn’t sure how he going to pay for them….

Furthermore, Tom thinks he may have other debts too- this might be the tip of the ice burg…

Tom is considering filing for bankruptcy. Depending on Tom’s entire financial picture, Tom has a few options which he can pursue…one of which may be filing for bankruptcy in hopes of getting a fresh start…

While the year is yet to conclude, some people think that the total number of consumer bankruptcies in the U.S. could top 1,000,000 in 2008. And, many states have seen double digit increases in the number of people filing for bankruptcy protection from 2007 to 2008. And the collapse of the the housing market in some states where values increased rapidly in the first part of this decade may be at least partially to blame.

So, what about Tom? Will he be one of the bankruptcies filed in 2008. Possibly. It depends on what kind of options he realistically has at this point. It also depends on how far in debt he really is & whether it’s realistic to think that he can pay them off now that he is unemployed.

Granted, the passing of the BAPCPA Bankruptcy Abuse Prevention and Consumer Protection Act in 2005 didn’t necessarily help people like Tom as it might have made it tougher for him to qualify for Chapter 7 bankruptcy. The BAPCPA appears to have been designed to spur more people to file Chapter 13 bankruptcy – the focus on designing a repayment plan to deal with debt instead of discharging unsecured debts like in Chapter 7.

The complexities of 2005’s BAPCPA are too much to examine here & whether or not these sweeping changes to the bankruptcy process will survive the newly elected administration of 2008 remain to be seen. However, even after the BAPCPA, the majority of bankruptcies being filed are still Chapter 7 cases- a.k.a. regular bankruptcies.

But, for now, the Tom’s of the world need to realistically examine their financial options. Filing for bankruptcy may be something that is on the horizon for more U.S. Citizens as more people find that they might not be able to service their debts as they presently stand.

Wait! There’s much more to this story! Visit http://www.bankruptcyaccess.com to get fresh
Chapter 7 and Chapter 13 consumer bankruptcy news, information, and more!

Article Source: What About Tom’s Bankruptcy?

Aug

29

What About Tom’s Bankruptcy?

Posted In: Personal Finance

Let’s look at “Tom.” Tom is a hypothetical person. That means he’s fictional, not real. But, he’ll be good to use as as an example for this article.

So, imagine this scenario. Tom walks into work one day and finds that his company is planning a large scale layoff in the next week. Tom’s learns that due to a downturn in business, his entire division is being eliminated. As a result, Tom is going to be receiving his final paycheck in a few days and he has to find a new job. Quickly.

Imagine that Tom bought a house in 2006 and he has a $350,000 mortgage to pay off. Tom thinks he has more than $17,000 in credit card debt and he owes the bank more than $20,000 on his SUV. Even if he wanted to trade the SUV in, it will be difficult to sell the SUV for a fair price now that gas prices have increased and the number of SUVs on the market is much higher than normal. It looks like Tom isn’t the only one who doesn’t want to pay so much in gas.

Now that Tom is looking for work, his debts are increasing monthly. Next, Tom’s wife gets sick and she needs a stay in the hospital. Medical expenses add up quickly & Tom isn’t sure how he going to pay for them….

Furthermore, Tom thinks he may have other debts too- this might be the tip of the ice burg…

Tom is considering filing for bankruptcy. Depending on Tom’s entire financial picture, Tom has a few options which he can pursue…one of which may be filing for bankruptcy in hopes of getting a fresh start…

While the year is yet to conclude, some people think that the total number of consumer bankruptcies in the U.S. could top 1,000,000 in 2008. And, many states have seen double digit increases in the number of people filing for bankruptcy protection from 2007 to 2008. And the collapse of the the housing market in some states where values increased rapidly in the first part of this decade may be at least partially to blame.

So, what about Tom? Will he be one of the bankruptcies filed in 2008. Possibly. It depends on what kind of options he realistically has at this point. It also depends on how far in debt he really is & whether it’s realistic to think that he can pay them off now that he is unemployed.

Granted, the passing of the BAPCPA Bankruptcy Abuse Prevention and Consumer Protection Act in 2005 didn’t necessarily help people like Tom as it might have made it tougher for him to qualify for Chapter 7 bankruptcy. The BAPCPA appears to have been designed to spur more people to file Chapter 13 bankruptcy – the focus on designing a repayment plan to deal with debt instead of discharging unsecured debts like in Chapter 7.

The complexities of 2005’s BAPCPA are too much to examine here & whether or not these sweeping changes to the bankruptcy process will survive the newly elected administration of 2008 remain to be seen. However, even after the BAPCPA, the majority of bankruptcies being filed are still Chapter 7 cases- a.k.a. regular bankruptcies.

But, for now, the Tom’s of the world need to realistically examine their financial options. Filing for bankruptcy may be something that is on the horizon for more U.S. Citizens as more people find that they might not be able to service their debts as they presently stand.

Wait! There’s much more to this story! Visit http://www.bankruptcyaccess.com to get fresh
Chapter 7 and Chapter 13 consumer bankruptcy news, information, and more!

Article Source: What About Tom’s Bankruptcy?