Bankruptcy Information- The Pros And Cons Of Chapter 7 Bankruptcy

Monday, November 16th, 2009
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Albert Alexander asked:


Chapter 7 is the most common type of bankruptcy, and is sometimes referred to as liquidation bankruptcy or straight bankruptcy. Chapter 7 is generally the simplest and quickest form of bankruptcy and is available to individuals, married couples, corporations and partnerships. Chapter 7 is one way for you to begin reestablishing your credit by eliminating the bulk, if not all, of your unsecured debt dramatically reducing your debt to income ratio.

Creditworthiness and the likelihood of receiving a Chapter 7 discharge are only a few of many issues to be considered in determining whether to file bankruptcy. Chapter 7 is used most often by people who are unemployed or very deeply in debt due to medical expenses or unexpected financial circumstances.

The process for a Chapter 7 bankruptcy is relatively easy. After a meeting with a bankruptcy attorney to discuss your financial situation, a bankruptcy filing may be recommended. In the case of a Chapter 7 filing, you will need to attend a creditors meeting, which generally takes place 30 days after the filing of the bankruptcy petition.

Creditors, who you have debt with, may appear and ask questions regarding the debtor’s financial affairs and property, but creditors rarely attend. Creditors, by law, are no longer permitted to initiate or continue their lawsuits, wage garnishments, attachments or other collection activity. This activity includes telephone calls from collection agencies demanding payment. Attorney’s fees for Chapter7 filings vary depending upon the complexity of the case, but generally hover around the $700 to $800 range.

In determining what debts will be discharged, or forgiven, by the courts there are certain types that can not be waived in a Chapter 7 bankruptcy filing. Debts for most taxes are not cancelled. Debts for educational benefits and student loans are not discharged unless a court finds that not discharging the debt would impose an undue hardship on the debtor and his or her dependents. Debts or obligations under a divorce or support decree are not usually cancelled, and debts due to fraud, dishonesty or misconduct are not cancelled.

Debts that you incurred a result of an intentional or even negligent misrepresentation on your part are not dischargeable in Chapter 7. Certain debts that the courts deem questionable may also be outside the scope of debt discharged. Debts owed to a single creditor totaling more than $500 for luxury goods will not be discharged if acquired up to 90 days prior to filing. Cash advances of $750 acquired within 70 days will also not be discharged.

Property is one of the biggest areas of concern for those considering bankruptcy. Consulting your attorney will make it clear whether or not your property is at risk when you file Chapter 7 bankruptcy. Sometimes property can be taken by the bankruptcy official (trustee) and sold to pay on your debts. Property or asset exemptions are determined based upon your situation, income and the laws of your state.

Chapter 7 is a complete and total liquidation of a debtor’s assets in order to pay off their creditors. Chapter 7 is designed as an orderly, court-supervised procedure by which a trustee collects the assets of the debtor’s estate, reduces them to cash, and makes distributions to creditors, subject to the debtor’s right to retain certain exempt property and the rights of secured creditors, such as mortgage companies and auto lenders.

Chapter 7 may be your best option however, if you are not eligible for Chapter 7 bankruptcy or if Chapter 7 will not meet your specific needs and goals, Chapter 13 bankruptcy is a useful alternative. Chapter 7 may not be available to debtors who have enough income exceeding their basic living expenses. For those who are deemed to have an excess of disposable income, the court will determine that they can afford to repay a portion of their debts through a Chapter 13 payment plan.



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Friday, October 16th, 2009
bankruptcy
Miodrag Trajkovic asked:


It is better to realize as early as possible that going through a bankruptcy claim is not easy. People generally opt for it as their first remedy. You must know the bankruptcy laws well in order to decide.

The bankruptcy law has been crafted in a way to promote provisions that are a part of filling bankruptcy claims. It contains systematized laws that help the debtor to rid himself of any financial obligations that he has to undergo. The Chapter 7 bankruptcy law is in other words called straight bankruptcy. This law deals with the liquidation process. According to this, the one who is filing for bankruptcy has to surrender all his assets except those that are unaccredited or exempted to the lawyer or the trustee in bankruptcy.

The court must appoint a trustee in bankruptcy and he will be given charge of selling the assets or converting them into cash. Once the assets have been converted to cash the creditors are paid with these funds. Under the Chapter 7 bankruptcy law you are discharged from any obligation after a period of four months.

When can you apply the Chapter 7 bankruptcy law? It is applied when the debtor is left with no property to give up or lose. This is one of the most common bankruptcies that are filed in the United States by either individuals or business corporations. You could personally file bankruptcy by abiding with the Chapter 7 bankruptcy law or the court may impose it.

The Chapter 7 bankruptcy law will prompt a business man to sell all his assets and pay what he owes the creditors and finally close down his business. The procedures are very similar for individuals who have been forced to file under the Chapter 7 bankruptcy law, the only difference here is the individual will have no business to close down.

The advantages of filing a claim under the Chapter 7 bankruptcy law first and foremost are that any amount of debt may be cleared and as soon as you get out of the trouble you are in, you get a clean chit. The other advantage is that there is no particular amount of debt to qualify you for filing under the Chapter 7 bankruptcy law. As there is a protection that is granted by this law, the creditors cannot exert any authority over you. It is processed very quickly and you can be discharged from any debts in a short period, say in about four to six months.

The disadvantage of the Chapter 7 bankruptcy law is that you have to give up your whole property. Debts like taxes, child support, housing mortgages, students’ loans and car loans are not discharged under the Chapter 7 bankruptcy law. Along with you the co-signers will also be pulled in and asked to pay for your home loan. This law may be only availed once in every six years.

It becomes difficult to avail other loans because your credit rating gets damaged. Once you have filed for the Chapter 7 bankruptcy law, it cannot be withdrawn.

Tread cautiously if you are considering filing under the provisions that are based on the Chapter 7 bankruptcy law. All you need is to be protected and not end up with added problems.



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Saturday, September 5th, 2009
bankruptcy
Dean Shainin asked:

The Bankruptcy law is a federal statutory law contained in title 11 of the United States codes. Congress passed the Bankruptcy Code under its Constitutional grant of the authority to establish a uniform law on the subject of the bankruptcy through out the United States. States may not regulate bankruptcy though they may pass the laws that govern other aspects of the debtor-creditor relationship. A number of the sections of the Title 11 incorporate the debtor - creditor law of the individual.

Bankruptcy allows a debtor, who is unable to pay his creditors to resolve his debts through the division of his assets among his creditors. The debtor is forced to resolve his debts through the division of his assets to his creditors.

This supervised division also allows the interests of all creditors to be treated with some measure of equality. Certain bankruptcy proceedings allow a debtor to stay in business and use revenue generated to resolve his or her debts. An extra purpose of bankruptcy law is to allow certain debtors to free themselves of the financial obligations they have accumulated, after their assets are distributed, even if their debts have not been paid in full.

A United States Bankruptcy court supervised bankruptcy proceedings and is where bankruptcy is litigated. These are parts of District Courts of the United States. The congress has established The United States Trustees to handle many of the supervisory and administrative duties of the bankruptcy proceedings. Proceedings in bankruptcy courts are governed by the Bankruptcy Rules which were promulgated by the Supreme Court under the authority of Congress.

There are two types of Bankruptcy proceedings.

* Chapter 7 is called liquidation. Informally called “straight bankruptcy,” the most common type of bankruptcy proceedings liquidation involves the appointment of a trustee who collects the non-exempts property of the debtor, sells it and distributes the proceeds to the creditors. The debtor turns over all non-exempt property or assets to the bankruptcy trustee who then converts it to cash for distribution among the creditors. At the end of the proceeding the debtor receives a discharge of indebtedness or the discharge notice, for all dischargeable debts, releasing him or her from personal liability for those debts.

* Chapters 11, 12, 13, involve the rehabilitation of the debtor to allow him or her to use future earnings to pay off the creditors. Chapter 11 is reorganization. In this chapter the debtors are allowed to continue its operations while paying their debts. In chapter 13, the lawyer and the debtor propose a plan to repay debts over a period of time up to three years.

A trustee is appointed to supervise the assets of the debtor. The debtor can either enter the bankruptcy proceedings or it can be initiated by the creditors. The creditors may not seek to collect their debts outside the proceedings at the most part, after the bankruptcy proceedings is filed. The property declared as a part of the state can not be transferred by the debtor to his property. Furthermore, certain pre-proceeding transfers of property, secured interests, and liens may be delayed or invalidated. Various provisions of the Bankruptcy Code also establish the priority of creditors’ interests.

The latest bankruptcy law is in effect. The landscape has changed for those who are considering bankruptcy. Before the debtor can file a bankruptcy case, they should undergo credit counselling, budgeting and debt managements before the debt is wiped out. Chapter 7 is not allowed to be used by a filer with a higher income, but instead they will be paying the sum of their debt under chapter 13. It will be tougher to find an attorney to represent you in a bankruptcy case because the law imposes new requirements to the lawyers.



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Thursday, August 20th, 2009
bankruptcy
Poly Muthumbi asked:


For the benefit of those who have got no idea what this term mean, I will start by defining what exactly it is. Bankruptcy is a lawfully declared incapacity of an individual or organizations to pay their creditors or lenders at a given period of time. Creditors may file a bankruptcy plead against a debtor which is called -involuntary bankruptcy, in an effort to recover a section of what is due to them. Commonly, many bankruptcy cases, however, are initiated by the debtor called a voluntary bankruptcy that is filed by the insolvent entity or business.

Even though bankruptcy permit a debtor a way out of a violent cycle of debt, it should not be taken carelessly, and should be a means of last option. But in this particular article, I will concentrate more on the two main types of bankruptcy which is the chapter 7 and chapter 13 bankruptcies. They are widely used for personal bankruptcy individual, a debtor surrenders his or her non-exempt property to a bankruptcy trustee who then liquidates the property and distributes the proceeds to the debtor’s unsecured creditors.

Chapter 7 type of bankruptcy as straight bankruptcy is the favorite option for people with less or no property and a batch of unsecured debt. It is a liquidation bankruptcy implicating that the court will trade any non-exempt assets you have to pay your creditors and irrespective of the quantity paid, release that debt. The debtor will not be granted a discharge if he or she is guilty of certain types of unsuitable behavior such as concealing records concerning his financial condition.

Similarly some debts such as spousal hold up, student loans, some taxes will not be discharged even though the debtor is usually discharged from his or her debt. Many individuals in financial distress own only exempt property like household goods, an older car and will not have to give up any property to the trustee. The amount of property that a debtor may let off varies from state to the other. Chapter 7 type of a bankruptcy, relief is available only once in any eight year period. Generally, the rights of secured creditors to their collateral continues even though their debt is.

Chapter 13 type of Bankruptcy, from time to time called the wage earner’s plan, or reorganization bankruptcy, is quite different from Chapter 7 bankruptcy which swab out most of your debts. In a Chapter 13 bankruptcy, you employ your income to pay some or all of what you are obligated to your creditors over time which is proximately anywhere from three to five years, depending on the size of your debts and income.

These debts must also be non-contingent and liquidated, meaning that they must be for a certain, fixed amount and not subjected to any conditions. Secured creditors may be entitled to greater payment than unsecured creditors. When preparing to enter bankruptcy, ensure you check as many personal bankruptcy online services as likely, where you will get advice on the type of bankruptcy best suited to you. Generally there are six types of bankruptcy but these two are the key ones.

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



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