Bankruptcy is a legal solution for addressing a financial situation where debts are rising and creditors are threatening action. This can be used to reduce the severity of the situation and provide a path to financial stability.
These laws were originally created to allow hard-working industrious folk a way out of serious financial strains. While a bankruptcy claim will besmirch a financial record for a full 7 -10 years full credit can be restored through proper financial attention.
It is a good idea to contact a bankruptcy attorney who can provide in-depth information on the various Chapters and courses of action available to ameliorating your financial situation. The bankruptcy process can be very detailed and intimidating, obtaining an experienced attorney can shed some light on this complex legal process.
Following is some basic information on the various types of personal bankruptcy that can help you settle your score with marauding creditors.
Chapter 7 Bankruptcy — is all about the discharge of your accumulated debts, this is what the original bankruptcy plan was for. Under a Chapter 7 liquidation proceeding all of the debtor’s non-exempt assets will be sold for a price. This cash resource will be used to pay off creditors according to the priorities outlined in the code.
Non-exempt assets may include properties that are not your primary place of residence, expensive jewelry, gold coins, valuable artwork, newer vehicle models with considerable equity and more. In most of the consumer cases, all assets are exempt. Therefore, there is nothing that can be liquidated and therefore nothing to pay creditors.
There are certain important requirements for eligibility. Those reorganizing their financial affairs under Chapter 7 must not have enough income to cover a minimum portion of their debt. This figure can be produced mathematically, but the bottom line is the cost of debt must exceed available income by a specific amount.
Chapter 7 Bankruptcy is typically the most convenient path to financial reorganization. It is also available to couples, individuals, corporations and other partnerships.
Chapter 11 Bankruptcy— can be filed by an individual or a company over the limitations set by Chapter 13 Bankruptcy. Here the primary objective is to address the pressing concerns of certain debts that are either unsecured or simply unwanted while restructuring other debts that are necessary to the continued operations of a company or individual.
The advantage of Chapter 11 for an individual is that it provides the debtor with instant protection to certain assets beyond those exemptions you find in Chapter 7 or Chapter 13. Chapter 11 bankruptcy is rarely used for individual financial restructuring, the provisions are better suited to corporate law. If you think that Chapter 11 is a solution to your financial distress, first seek counsel from a reputable bankruptcy attorney.
Chapter 13 Bankruptcy — a meeting must be held between the debtor and creditor and a plan formulated that the creditors can accept. Creditors will typically pull toward getting their money sooner and in larger payments.
It is not necessary that the creditors accept the plan, but a trustee and judge would be more inclined to accept the plan if they do. The judge will decide whether or not the plan is fair to all creditors involved. As long as each creditor receives what they would have received had the debtor filed under Chapter 7 the file can be approved.
In Closing —If you think your financial future would benefit from reorganization, get qualified help. An experienced bankruptcy lawyer can look over the particulars of your situation and outline the most advantageous route from your financial debacle.