Bankruptcy is a legally stated inability of an individual or organizations to pay their creditors whereas personal bankruptcy is a procedure which allows an individual to declare bankruptcy. Bankruptcy laws provide for the development of 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.
The bankruptcy cases cannot be filed in the state court but can only be filed in the bankruptcy court. The motive of a bankruptcy law is to help people who can no longer pay their creditors get a fresh start by creating a repayment plan. In addition, through reorganization or liquidation, Bankruptcy laws help protect businesses in trouble and provide orderly distributions to the business creditors.
Before filing for bankruptcy, you must be aware of most common bankruptcy questions to ask and the basics of how to file bankruptcy. Basics provide information on different aspects of the federal bankruptcy laws.
The bankruptcy laws have been categorized in chapters. Chapter 7 bankruptcy cases are commonly referred to as liquidation cases and may be filed by an individual, corporation or a partnership whereas chapter 11 bankruptcy is known as “reorganization”. The chapter 12 bankruptcy is the one which offers bankruptcy relief to those who qualify as farmers and the chapter 13 bankruptcy is the debt repayment chapter for individuals with regular income and whose debts do not exceed $ 1000000.
A declared state of bankruptcy can be requested or initiated by the bankrupt individual or organization or it can be requested by creditors in an effort to recoup a portion of what they are owed. However in the overwhelming majority of cases the bankruptcy is initiated by the “bankrupt” individual or organization.
People facing debt traps often find no ways to come out of it. They constantly have to face harassment by creditors and have to suffer because of the lack of awareness of their rights as a debtor.
While declaring bankrupt can be last option for some yet there are alternatives that can be adopted as a means to come out of debt trap without actually filing chapter 7 or chapter 13 of bankruptcy.
A Chapter 7 filing means that the business intends to sell all its assets distribute the proceeds to its creditors and then cease operations.
A Chapter 13 Bankruptcy is a reorganization plan for individuals. To qualify for Chapter 13, an individual must have Secured Debts under $807,750 and Unsecured Debts under $269,750. Under Chapter 13 the debtor keeps all of their property, but in return they make regular payments to a trustee, who distributes the payments to the creditors. Most Chapter 13 plans last for three to five years, and then the remaining unpaid and eligible debts are discharged.
Bankruptcy allows for a fresh start. Under the Bankruptcy Abuse Prevention and Consumer Protection Act (“BAPCPA”), which significantly amended the U.S. Bankruptcy Code effective October 17, 2005, prior to filing a bankruptcy case, an individual must obtain some consumer credit counseling from an entity approved by the U.S. Trustee within 180 days of the date of the filing of a bankruptcy case. Such counseling is intended to provide an individual with alternatives to filing a bankruptcy case.
To file a bankruptcy case you can hire a bankruptcy lawyer to represent you in court or you can get help from a bankruptcy petition preparer who is not an attorney. The law requires what an attorney or bankruptcy petition preparer is going to do for you and how much it will cost.
Along with attorney you should analyze your eligibility for different forms of debt relief available under bankruptcy code and which form of relief is most likely to be beneficial for you.
Bankruptcy Petition, Schedules and Statement of Financial Affairs, as well as in some cases a Statement of Intention need to be prepared correctly and filed with the bankruptcy court along with filing fee.
Once your case starts, you will have to attend the required first meeting of creditors where you may be questioned by a court official called a ‘trustee’ and by creditors.
If you choose to file a Chapter 7 case, you may be asked by a creditor to reaffirm a debt. You may want help deciding whether to do so. A creditor is not permitted to coerce you into reaffirming your debts.
If you choose to file a Chapter 13 case in which you repay your creditors what you can afford over 3 to 5 years, you may also want help with preparing your chapter 13 plan and with the confirmation hearing on your plan which will be before a bankruptcy judge.
If you select another type of relief under the Bankruptcy Code other than chapter 7 or chapter 13, you will want to find out what should be done from someone familiar with that type of relief.
Your bankruptcy case may also involve litigation. You are generally permitted to represent yourself in litigation in bankruptcy court, but only attorneys, not bankruptcy petition preparers, can give you legal advice.
The primary purpose of the laws of Bankruptcy are: (1) to give an honest debtor a “fresh start” in life by relieving the debtor of most debts and (2) to repay creditors in an orderly manner to the extent that the debtor has property available for payment.
Bankruptcy allows the debtor to resolve his debts through the division of his assets among his creditors. Additionally the declaration of bankruptcy allows debtors to be discharged of most of the financial obligations after their assets are distributed even if their debts have not been paid in full. During the pendency of a bankruptcy proceeding the “Debtor” is protected from extra-Bankruptcy action by creditors by a legally imposed “stay.”
Alameda County, CA
Bexar County, TX
Broward County, FL
Cook County, IL
Cuyahoga County, OH
Dallas County, TX
Harris County, TX
King County, WA
Kings/ Brooklyn County, NY
Los Angeles County, CA
Maricopa County, AZ
Miami-Dade County, FL
New York/ Manhattan County, NY
Orange County, CA
Philadelpia County, PA
Queens County, NY
Riverside County, CA
San Bernardino County, CA
San Diego County, CA
Santa Clara County, CA
Suffolk County, NY
Tarrant County, TX
Wayne County, MI
Chicago Metro, IL
Los Angeles-Long Beach Metro, CA
New York Metro, NY
Washington Metro, DC-MD-VA-WV
District of Columbia