Are you thinking of filing for bankruptcy? It is nothing to be ashamed of, its your constitutional right to do so. If you are unable to keep your bills current and need assistance, bankruptcy can give you that new start you need. By either liquidating your possessions to help pay your creditors, reorganizing, or by starting a repayment plan you can be one step closer to a new start. Bankruptcy laws not only protect individuals, but troubled businesses also, providing fair distributions to business creditors by way of restructuring or liquidation.
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Filing is quiet easy if you obtain an experienced bankruptcy attorney to do so. Finding the right one in your area is also easy, online. The majority of bankruptcy cases are filed under the Chapter 7, Chapter 11, or Chapter 13 codes. These cases cannot be filed through the state court since the federal courts have sole jurisdiction in these matters. Usually a case is initiated by the debtor filing a petition with the court. This can be a business, an individual, or both spouses jointly. A statement is required listing your complete financial position to include but not limited to assets, liabilities, income, all creditors and amounts owed. By filing this petition, it allows the debtor to reorganize or come up with a repayment plan. Type of Filing may change dependent upon your specific situation and what the court ordered trustee seems to be in the best interest. Some of the factors such as income, employment, possible future monetary claims you may be able to pursue, etc. Often times, there is little or no money available in these disputes, so the debtor may be given a "discharge" without any further liability. Other cases, however, when there are possessions and personal property involved, disputes arise over the worth of the property, the amount owed, how much of the debt should be discharged, and how much should be paid to others involved in the suit, often times resulting in more proceedings. Proceeding my take a month or as much as a year before the terms are agreed upon, all depending on the complexity of your finances. Then depending upon the Chapter chosen, you can be immediately discharged or continue with the restructuring until the agreed upon amount is paid.
Chapter 7 is when the bankruptcy code allows for liquidation, meaning the sale of the debtor's unnecessary property and redistributing money from those sales to the creditors. This involves a precise determination of current income, not to include social security income or some other payments made to the debtor and completion of Bankruptcy Form B22A. Creditors can file an involuntary Chapter 7 case in certain circumstances against debtors. Also defined are the unsecured, secured debts, and collateral that may be seized against payment. This form usually results in a discharge within a couple of months from filing.
Chapter 13 is an individual debt adjustment that lets the debtor keep his or her property but continues to pay the creditors usually within a three to five year time period. The filer has to spend all of their disposable income after allowed expenses dictated by the IRS are deducted. With this option, the individual is able to keep physical property, their homestead residence, investment properties, etc and discharge the assets which they do not desire. To be eligible for 13, you are unable to owe more than $360,475 in unsecured debts and no more than $1,081,400 in secured debt. The debt eligibility criteria is periodically increased and is attached to the consumer price index (CPI).
Chapter 11 is usually filed by corporations or partnerships and this allows a reorganization plan in order to keep the business active, while still paying creditors over time. Individuals can also file chapter 11 depending upon the complexity of their finances. It has been known for creditors to request for individuals whom originally filed for Chapter 13, to switch over to Chapter 11. This usually done because they owe more than the eligibility threshold. With Chapter 11, creditors have more control over the assets and the overall solution.
Some changes to the bankruptcy laws were made in 2005 making it more difficult for some people to file. Those with higher incomes cannot use Chapter 7; instead, they are required to repay part of their debt under Chapter 13. To find out if your income is too high you can check the "means test." If your household income is less than or equal to the median income for the same size household in your state, then you can file Chapter 7. You might still be interested in Chapter 13 as you are able to keep any prized possession.
Before filing any bankruptcy case, all debtors are required to get credit counseling within 180 days before filing. This must be completed with an approved US Trustee office agency. The reason for this is to see whether you actually need to file for bankruptcy or if an informal repayment plan would suffice. Counseling is mandatory even if you are sure that repayment plans would not work or there are debts you consider unfair. You are not required to agree with the counseling decisions, but if they recommend a repayment plan, that will need to be submitted to the court, along with proof of the competed counseling, before filing for bankruptcy. The credit counseling can either be done on a one on one individual bases or in a group setting. Budget and debt management counseling will also need to be completed before any debts can be discharged.
Lawyers can be costly dependent upon the complexity of your financial position and since the new laws enacted require them to personally guarantee the accuracy of their client's information, therefore adding more time spent on each case. If you are in a situation where you are drastically unable to cover all your bills, then bankruptcy may be what you need to settle your accounts. Before you know, it will be over and you will be glad you have closed that chapter in your life.
Is Bankruptcy Right For You? Talk to Bankruptcy Attorneys Free and Confidential. Licensed bankruptcy attorneys are available. Attorneys will call you to discuss your case for free. Find out if bankruptcy is right for your situation.
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