Bankruptcy InformationTo Help You Decide

Joseph Devine asked:




The United States Constitution places bankruptcy under Federal jurisdiction and calls for Congress to write laws constituting uniform guidelines. However, the execution is mandated by statute law as found in the Bankruptcy Code located within Chapter 11 of the United States Code. State law also contributes to minor specifics which are not clarified at the federal level.

Under Title 11, there are six types of bankruptcy. Chapter 7 deals with basic liquidation for businesses and individuals. Chapter 9 is for municipal bankruptcy. Chapter 11 is used for reorganization and rehabilitation, generally by business debtors. Chapter 12 pertains to rehabilitation for fisherman and farmers. Chapter 13 is also a form of rehabilitation, but it is for individuals with a regular source of income and entails a payment plan. Lastly, Chapter 15 is used for ancillary as well as other international cases.

The most common filing is under Chapters 7 and 11. Most consumers file under Chapter 7, and almost all businesses use 7 or 11. In Chapter 7, an individual surrenders all of their property which is not exempt to be liquidated. The funds from the liquidation are then distributed to the creditors. The debtor is granted to a discharge of some debt, but only if he meets legal stipulations and has not demonstrated inappropriate behavior such as concealing records. However, certain debts such as child support or school loans will not be discharged. An individual may only file for Chapter 7 once every eight years.

With Chapter 13, the debtor retains all property and assets but is required to dedicate a percentage of his future income to paying off creditors. The period of repayment and amount of payment vary as they are determined by factors such as the value of the debtor’s property and the amount of the debtor’s income and expenses. However, a standard time range would be over three to five years. Often secured creditors will be entitled to larger payments than unsecured creditors.

In Chapter 11, the debtor becomes a “Debtor In Possession” DIP as they retain control and ownership of their assets. Bankruptcy Court will work with the debtor and creditors to establish a plan while the debtor still runs his business. Creditors then vote on the proposed plan. The debtor will be permitted to continue to operate and pay back the debt as specified by the plan.

Vanessa Hopkins

Chad Fisher asked:




When you’re in a financial hole that is so far down that there seems there’s no escape, there is one final option: bankruptcy. Bankruptcy is a way of legally stating that you cannot pay the debts that you’ve accumulated. The result of this declaration is that your creditors can no longer attempt to collect money or property from you directly. Effectively, bankruptcy allows you to “wipe the slate clean” in some respects – you will no longer be legally bound to pay certain debts after filing for bankruptcy.

 There are five primary results to filing for bankruptcy. The first is, as mentioned, is that it can wipe away previous debts. This is known as discharging – but be aware that not all debts can be discharged. A nice side effect is that it’ll stop annoying and harassing calls from creditors. Second, bankruptcy can stop wage attachments, which are when a creditor gets a legal order to take money from your paycheck to pay a debt. Finally, it protects your future interests, meaning that any new property or money you own is safe from creditors.

 As noted above, not all debts can be discharged. For the most part, any unsecured debt can be discharged – unsecured debts are ones that are not backed by property, such as credit cards. Secured debts, such as car loans and home mortgages, are attached to property, and can be repossessed by a creditor. Other debts that cannot be discharged include: alimony and child support, student loans, debts resulting from fraud, tax bills, and any debts accrued after filing bankruptcy.

In most cases, people file for bankruptcy when they want to hold on to some of their property and protect it against creditors. There’d be little point in filing if you’d just end up homeless on the street. When you file for bankruptcy, you can usually keep your furniture and other household items, some jewelry, clothing, and any work-related tools. You can also keep up to $20,200 in home equity, or $10,775 in personal property if you don’t own a home. In most cases, you can keep your car, as well.

 Bankruptcy is not without its downsides, however. While bankruptcy in itself will not lower your credit score, bankruptcies remain on your credit report for 10 years. It can be extremely tough to be granted credit after a bankruptcy, but it is possible. That decision is up to the lender.

 In order to file for bankruptcy, you are required to have enlisted the help of a credit counseling service prior to filing. You also have to consult such an organization after declaring bankruptcy. In addition, there is a fee to file for bankruptcy, and as you might imagine there is a lot of paperwork to do. You may also need or want a lawyer to help you prepare your paperwork, so you must consider those fees as well. Bankruptcy will have very serious repercussions, so make sure to carefully consider all the options and effects before filing.



Thelma Weber

Marcus Peterson asked:




Chapter 13 bankruptcy is a method employed by consumers who have debts and are not in a position to pay them back. It is a way for them to restore their financial status and get back to a zero balance.

Bankruptcy is a legal process whereby a creditor files for it in a court of law, expressing his inability to pay his debts. Chapter 13 bankruptcy is usually called the reorganization bankruptcy. It is a debt that is filed by consumers who wish to pay their debts within a period of three to five years. It is a strategy that helps individuals to keep some of their possessions such as their homes and at the same time have a means of financially meeting their usual living expenses.

A consumer presents a bankruptcy petition before a court, listing his schedule of assets and liabilities. After this, the person filing for bankruptcy presents a repayment plan, which is meticulously reviewed by the creditors to check whether it meets their needs. After taking stock of objections and making amendments, both the parties follow this reorganization plan.

However, there are other additional confirmation tests that remain before the reorganization of bankruptcy. A part of this is a test to compare amounts that the creditors would receive if they were to follow Chapter 7 bankruptcy. This test is meant to confirm that creditors should receive the same amount from both Chapter 7 and Chapter 13 bankruptcy. Another test requires the applicant to pay all their disposable income to the repayment plan as well.

Chapter 13 helps those people who are interested in keeping an important possession, such as one?s home. An example is a person who has missed many house payments and is scared of receiving a foreclosure. This individual can halt the same by filing for Chapter 13 bankruptcy. This is usually referred to as ?automatic stay? and allows time for a consumer to catch up on missed payments.

Chapter 13 bankruptcy is thus quite helpful. However, one important aspect one needs to keep in mind before filing is that a consumer?s credit record suffers a 10-year black listing where it becomes extremely difficult to secure a loan when one is needed.

Tisha Turner