Bankruptcy Questions Answered

Jon Arnold asked:


In this day and age when it appears that most people want instant gratification, signs are indicating that filing for bankruptcy is not an exception to this. Despite the long term negative effects of bankruptcy like the fact that it will remain on your credit report like a huge red flag for the next decade, many people are looking at bankruptcy as a quick fix to give them that instant gratification to get out from under a mountain of financial obligations that seems to never dwindle down to a manageable size.

In reality, the truth of the matter is that there is nothing “instant” about the process of filing bankruptcy except for the psychological stigma that is typically attached to the process of bankruptcy, where people tend to feel like a failure for their need to raise the white flag and give up financially to start over.
With the significant recent changes in the bankruptcy law however, most people do not realize that filing bankruptcy is not a given any more. In fact, you may not even get approved to file even if you want to. In addition, there are certain types of financial obligations that are not discharged via bankruptcy, such as federally funded student loans, alimony payments, and similar court ordered judgments. In the latter category, if you delay filing bankruptcy and one of your creditors files a lawsuit against you to collect the outstanding balance, and that judgment is won, then that particular obligation cannot be wiped clean by bankruptcy because there is already an existing court order that requires you to pay it.

The psychological ill effects like low self esteem and feeling like a failure do not need to exist for filers. A lot of the people who file for bankruptcy each year do not do so because they are taking advantage of the system, nor is their filing due to any type of gross financial mismanagement. Rather, it is a reaction to a significant or live changing event that had a drastic impact on their income, such as a huge medical expense, a job layoff, a very messy divorce, or similar things that are out of the consumer’s control.

One of the even more sad things about bankruptcy filings is that most consumers have not done their due diligence to seek options or find out what realistic alternatives might exist for them. For example, a personal loan may get you back on your financial feet without the long term negative effects of bankruptcy. Similarly, a debt consolidation program could also work, where the program will pay your debts at a lower monthly expenditure, which may give you the financial breathing room you need to get back in the saddle financially.

Sometimes bankruptcy is the only viable option, but you still should thoroughly investigate your options. But if bankruptcy is required, make sure you go into it with your eyes wide open. With the changes in the bankruptcy law, it is no longer a do-it-yourself process, and if you attempt to do it yourself, you could end up having more of your assets liquidated than what is actually required by law. The money you invest in a good bankruptcy lawyer can pay for itself over and over again, since they know the law and can also advise you of your possible options.



Bankruptcy Questions

James Banks asked:


Business bankruptcy is a situation in which a business organization has more liabilities than assets and is no longer capable of meeting its financial obligations. Any type of business can file for business bankruptcy.

Business bankruptcy can provide relief to the business owners who are overwhelmed with credit problems and cannot find any other way out of debt. However, business owners must also face the fact of losing one’s business and damaging one’s credit standing and endure embarrassment is a possibility. There is not much stigma attached to Business Bankruptcy because it is, in fact, used by many businesses to restructure their companies.

Though Business Bankruptcy may seem different from personal bankruptcy, they both target the same goal: a way out when all possible solutions fail to alleviate the current situation.

When a business or a company is on the verge of forfeiting payments on a debt, it is the sign for an owner or manager to know that the time has come to file for business bankruptcy.

Are there any differences between the different business bankruptcy types?

There are 2 main types of business bankruptcy: chapter 7 and chapter 13, but the latter has more advantages than the former because it is federal bankruptcy, and the law does not require the liquidation of the business itself. As an alternative, the company will have to fulfill paying the debt according to the agreement with the creditors. The company has the chance to recover from the debts and can make profits again. But any decision-making has to be pre- approved by the federal court as the business bankruptcy law stipulates.

Brandon O’Brien is the current manager of a company that filed for bankruptcy after following our professional advice and is currently following making his compulsory payments. Business bankruptcy has helped him regain the company’s financial control and has given him a new way of dealing with the debt problems the company has carried for many years and has not yet solved them.

Brandon O’Brien:

What should I do after filing for Chapter 11 Business Bankruptcy?
James Banks:

Chapter 11 Business Bankruptcy allows the company to keep its assets. Nevertheless it is recommended some bonds be liquidated in order to pay off part of the debt. The amount can be reduced, and the payment will not be too high; allowing the company to generate profit after all. Regardless of what method you use to reduce the debt, the manager of the company has to regularly report to the federal court any decision made in the company.

Brandon O’Brien:

So, after filing for Business Bankruptcy, do the lawyers take care of everything?

James Banks:

Do not believe that by filing for Business Bankruptcy your financial situation will be resolved. You, as the manager will have to make sure that the company has enough cash to endure the whole filing process, and we recommend that you follow a plan in order to avoid any type of delay during the case.

One way to take care of creditors once and for all is to put them all together and set up a plan to start the repayment process. The debt will be reduced, and the creditors will see you are in the process of paying them. This creates trust and understanding as to why you file for bankruptcy.

Remember, filing for Business Bankruptcy is a serious decision, and one that should only be considered when all other options have been tried. It would be wise to seek advice from a financial and legal professional before making any sudden decisions.

We have different articles of interesting topics and current and former clients’ experiences with our programs. Take a look at topics related to Business Bankruptcy, situations in which people can fall into and how to keep yourself a debt free person.

http://www.commercialdebtcounseling.com/avoidbankruptcy.shtml

http://www.commercialdebtcounseling.com/business/business-y/business-business-bankruptcy-filing-laws.shtml



Bankruptcy Questions

storegalore asked:

bankruptcycreditreport.co.uk How To Aviod Bankruptcy Preserve in mind that when it comes to bankruptcy you might would like to look for other solutions, simply because you must discover someway of acquiring your individual and business financial obligations.

Legal Helpers asked:


Since federal law governs bankruptcy, it does not matter where someone lives, the procedures will all be the same. If a person live for example in Illinois bankruptcy proceedings will be the same as those living in California. An attorney is always recommended for those contemplating going through the process, as they can make sure the petitioner qualifies for the type of bankruptcy for which they file.

Even as the changes in the bankruptcy code affected filings across the nation, for those filing for bankruptcy relief in the Windy City the timed release from debt is sometimes a bitter pill. Seeing many Chapter 7 applications switched over to a Chapter 13 debt adjustment instead, there is some question as to whether filing for Chapter 13 Chicago debtors seek timed release or are simply doing the best they can with what is offered to them.

The fresh start that used to be the hallmark of a bankruptcy filing is not open to such debtors, yet at the same time they do not stand to lose their homes and assets either. Even if they are behind in mortgage payments, they will still have the option of curing that deficit and thus holding on to the family home, offering stability to their families rather than the fire sale of the primary residence that will result in having to move into a potentially less desirable neighborhood and home.

The biggest selling point Chapter 13 Chicagoans realize is the fact that debts may be restructured to suit the needs of the payer, not the payee. In addition to the foregoing, remember that a Chapter 13 filing - although negative on the credit report - will not be as bad on paper as a Chapter 7 filing. Sure, you are stuck making payments, but all in all you can point to the good faith effort you have made at meeting your financial obligations. Additionally, the extra time that you buy by filing for this bankruptcy protection is often enough to ensure that your family is not forced to involuntarily relocate to a neighborhood or home that does not fit your needs.

There are two types of personal bankruptcy, Chapter 7 and Chapter 13 that offer debtors protection from unruly creditors or collectors. There may some key points about the person’s state of residence that is pertinent to filing bankruptcy, even though it is a federal court procedure. There are exemption limits to some personal possessions, meaning that the petitioner can protect certain assets from liquidation. Depending on length of residency in Illinois bankruptcy attorneys can help determine if they should use state exemptions or federal exemptions.

When contemplating bankruptcy an experienced attorney can help debtors sift through the paperwork quickly and easily and make sure that everything the petitioners puts into their petition is true and accurate. Today’s bankruptcy judges will hold attorneys responsible for false statements made by the petitioner they represent to make sure that the debtor and creditor are both treated fairly under the new laws.

Additionally, persons petitioning the courts for protection under federal bankruptcy laws will have to attend counseling sessions from firms approved by the court to help keep them financially healthy in the future. By preventing repeated bankruptcy not only are the credit companies made more healthy, but the debtor learns to be more responsible with their credit.



Bankruptcy Questions

Poly Muthumbi asked:


Businesses that are faced with overwhelming fact that their debts have full-fledged to such a huge amount that they might have to settle for bankruptcy filing might not have a clue about how to go about this path. Such businesses are normally in a situation in which they have more liabilities than assets and are no longer capable of meeting their financial obligations.

Any type of business can file for this bankruptcy. Essentially it is common part of business, no matter what market you are in. It occurs especially among companies owned and operated by ordinary people who place everything they have in order to succeed. There are many times when even successful companies become knotted in debt making them to consider a business bankruptcy as their only option. This bankruptcy occurs when a business organization has more liabilities than assets. They are no longer competent of meeting their financial obligations.

The foremost step to take is to put your bankrupt status in writing by filing for bankruptcy through the bankruptcy court. Bankruptcy is the filing of Chapter 7 or Chapter 11 by corporations and partnerships. On the filing of a Chapter 7 plead, the court select a trustee whose prime duty is to sell the assets of the bankruptcy estate, and then make distributions to creditors. Businesses, unlike individuals, cannot have any property exclusion, so all assets are to be sold and distributed accordingly.

Many businesses opt for bankruptcy filing because of the reprieve it provides owners sinking in credit crisis with no way out of debt. The good thing about a business bankruptcy compared to a personal bankruptcy is the fact that so many companies do it as a way of streamlining their business that there no threats around it as a result of a lot of arrears. The bankruptcy filings sources are Automatic Display Files. When you search any of these sources, the system automatically displays a content and coverage description.

The bankruptcy law can provide reprieve to the business owners who are plagued with credit disaster and cannot find any other way out of debt. However, business owners must also face the fact of losing almost all of the business and damaging again almost all of the credit standing and tolerate humiliation is a possibility. There is not much stigma attached to Business Bankruptcy because it is, in fact, used by many businesses to streamline their companies. Business bankruptcy state if filed in court can lead to a situation where you can loose your business completely and thus destroying the chances of recovery. The disadvantages of filing business bankruptcy therefore are many and some are specified as follows.

A step of bankruptcy filing in court will press one to engage an attorney to present their case and since the attorney fees are not ostensible one might have to organize heavy fees plan. The proceedings costs are very pricey and time consuming. Therefore, one must not expect the decision of the court to provide an automatic reprieve, in any case the court has instant control over your assets.

As a result you loose the control on your business and thus you can not have any plans to improve it at such a given period that is unpredictable. Even Mortgage after bankruptcy will also not bring any reprieve under the situation on account higher interest rates are being normally charged in such cases. Despite filing bankruptcy case, you have to pay for your pending taxes as such you wont get any relief on your backlog taxes.

Poly Muthumbi is a Web Administrator and Has Been Researching and Reporting on Debt for Years. Visit Her Site at BANKRUPTCY FILING



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Lesley Lyon asked:


Bankruptcy law provides for a plan that allows a debtor who is unable to pay his creditors to resolve his debts through the division of his assets among his creditors. This also allows the interest of all creditors to be treated with equality. Certain bankruptcy laws allow a debtor to continue his business and use the revenue generated to pay off the debts. An additional aim of bankruptcy law is to allow certain debtors to liberate themselves of the financial obligations they have accumulated after the division of their assets. Bankruptcy law includes comprehensive access to civil litigation, credit, consumer law and commercial transactions.

Bankruptcy cases are either voluntary or involuntary. Voluntary bankruptcy cases involve debtors petitioning the bankruptcy courts. In involuntary bankruptcy, creditors rather than the debtors file the petition. Voluntary bankruptcy cases are majority whereas involuntary cases are rare except occasionally in business settings to force a company into bankruptcy so that creditors can enforce their rights.

Bankruptcy law prohibits some filers with higher income from using chapter 7. To file for chapter 7 current monthly incomes against median income is measured. If it is less than or equal to median income, chapter 7 can be filed. If it is more, the ‘means’ test must be passed to file for chapter 7 which is the requirement of the new bankruptcy law.

The purpose of the ‘means’ test is to find out certain allowed expenses and debt payments are subtracted from the current monthly income. f the balance is below a certain amount chapter 7 can be filed.

Bankruptcy law can be broadly classified as follows:

Co-operative bankruptcy is filing of chapter 7 or chapter 11 by co-operations and partnerships in which the trustee appointed by the court sells the assets and distributes the proceeds to the creditors. The trustee’s commission, priority debts and debts to unsecured creditors are paid on a pro rata basis.

In chapter 7, the debtor’s business operations cease once the case is filed. On the other hand in chapter 11 the business typically remains in operation and the debtor is given the same right as a trustee.

Personal bankruptcy is commenced by an individual filing chapter 7, 11, 12or 13. The debtor is allowed to exempt certain property (household furniture, jewellery, clothing, pensions, insurance policies and other assets) from liquidation by the trustee. Exemptions vary from State to State. The automatic stay takes effect immediately upon the filing, which prohibits collecting money, or taking property from the debtors. It usually remains in effect through out the case.

In chapter 7 bankruptcies, the debtor files a petition with the court with detailed financial information about his assets, debts and income. These papers are executed under penalty of perjury, the duration being three to four months. Chapter 11 bankruptcies are a reorganization procedure used by business partnership and co-operations. In this case, the debtor will act on his own as a trustee and is called a debtor ‘in possession.’

As a general proposition, bankruptcy laws state that older income taxes (more than three years old) can be wiped out in bankruptcy, but not the new incomes taxes. Prior to filing bankruptcy, the debtor should have his own particular tax situation assessed. As a general rule, debtors filing bankruptcy continue to complete their own returns and pay their own post-bankruptcy taxes.



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