Confused which bankruptcy to file? Check common types of bankruptcy

Chapter 7: It's also known as liquidation bankruptcy, which means your liquid assets are used to repay creditors. Liquid assets are those assets that can be converted into cash quickly, e.g. saving and checking accounts. Some of your liquid assets are distributed to the creditors by courts. Any remaining debt after distribution of liquid assets to your creditors is discharged. After this you are not liable to repay any debt and no creditors or third party collection agencies can claim any debt from you.

To qualify for chapter 7 bankruptcy, you need to show as per your family size your income is less than the median in your state.

Chapter 11: Also known as reorganization and commonly used by the owner of a business or corporation. In chapter 11 bankruptcy, you can continue your business and maintain ownership of all your assets and to pay off your creditors, work out a reorganization plan.

Chapter 12: Especially for family farmers and fishermen. In chapter 12 bankruptcy, debtors can control their assets by full ownership and work out a reorganization plan to pay off the creditors. It’s like chapter 13 bankruptcy but stretches over three year.

Chapter 13: Filing chapter 13 bankruptcy is adjusting your debt with regular income and reconstructing your repayment plan. You can repay some creditors in full with interest, others a part of your debt in a time period of three to five year with a repayment plan.

Relief for homeowners and mortgage borrowers

The Obama's new mortgage plan is in progress and hope to be in effect soon. Six participants have signed up for President Obama's loan modification plan, which includes 3 of the nation's largest banks, reported by The Treasury Department.

1. JPMorgan Chase (JPM, Fortune 500), which will get up to $3.6 billion
2. Wells Fargo (WFC, Fortune 500), $2.9 billion
3. Citigroup (C, Fortune 500), $2 billion.
4. GMAC Mortgage, $633 million
5. Saxon Mortgage Services, $407 million
6. Select Portfolio Servicing, $376 million.

More loan servicers will join over time, said by a treasure spokesman.

The major loan servicers have already started modifying loans earlier this month under government initiative. This includes JPMorgan Chase and Wells Fargo. And Citigroup will start soon.

Homeowners and borrowers were desperately waiting for the program to launch since it was announced in the month of February this year. Under this modification plan, the servicers will reduce interest rates in such a way that the monthly installment should not go beyond 38% of pre-tax income of a borrower. It can be reduced to 31% by government. Loan amount can also be reduced to affordability levels by servicers. Government will share in the cost that the servicers will reduce.

"We view this modification program as yet another incremental opportunity for thousands of homeowners to preserve and maintain the dream of homeownership," Wells Fargo said in a statement.

It's great news for mortgage borrowers. It will help up to 9 millions borrowers’ to stay in their homes and own it completely. I really appreciate the plan and step taken by President Obama to help homeowners. I'm waiting for this modification plan to start in full flow.

ID Theft: Protection, Detection and Recovery

ID theft is a fraud where someone pretends to be someone else in order to steal money of other benefits, which can be a huge loss for the genuine person. Now technology is so developed that we cannot be sure that our identity is secure. So it's very important to know how you can protect your identity, or detect an identity theft and also to recover if you became an identity theft victim.

I find these three videos very helpful and so want to share this.

1. What Can You Do to Protect Yourself?



2. How to Tell You've Become a Victim of Identity Theft

Credit card debt: Most American's are suffering from.

Do we use credit card positively? We our self know the answer better. There is no responsible use of credit card. Our expenses get increased with the credit card.

Credit card is a great help if we use it in a better and positive way. It's use should be for emergency purpose when you don't have cash. But now days we don't carry cash, because we have credit card. It's seen that half of our monthly income goes for credit card bill and that's not enough to stop the growing debt as every month we manage to pay the minimum payment and the bill amount remains closer to original amount. We pay interest more than that of original amount we spend, but we hardy think on that.

We don't get enough to pay the bill in full and keep paying the minimum amount and thus the credit card debt keep growing. It's same as gaining weight. You can gain it easily, but hard to lose. Then you work hard to lose your weight and in the same way you work hard to get out of credit card debt