When people are unable to pay the outstanding dues, it is called the condition of the bankruptcy in a business sense. Bankruptcy is a common word to the people who have lost everything and declares legally that he has no more ability to continue his business or pay the amount he owes to a different body. There are two terms here and one may meet with a judge to make a sure payment schedule. One may also have a business that is declared legally as a bankruptcy. In this case, the business may be closed permanently or make payments at a reduced rate to the creditors in order to operate further.
Content Outline
Basics Concepts of Bankruptcy
There are two parties in the bankruptcy process. One party is called the debtor, and another party is called the creditor. The debtor is the person who faces a debt crisis and owes money to the party of the creditor. In most cases, the debtor can be an organization or an individual. On the other hand, the creditor may be an organization that claims to the debtor stating that the debtor owes property or money.
Types of Bankruptcy
There are four types of bankruptcy in most common in the United States of America. These four types are called chapter according to the bankruptcy code in this country. There are some factors in these chapters. It is a fact where you are an individual or part of the organization to claim that you are bankrupt.
Chapter 7
Chapter 7 is one of the most common types filed by individuals or spouses. They claim that they are filing for bankruptcy. This is a type of liquidation bankruptcy which explains that the trustee sells off all kinds of non-exempt assets to make sure it is possible to pay the debts at full extent. All debts may not be repaid but it will mean the fullest possible repayment.
There may be different parties like individuals, corporations, and partnerships who are legally qualified for the kind of chapter 7 bankruptcies. They may tend to be used to make sure a totally clean slate. A business may file under chapter 7 to prove that they are not able to pay a single debt. But in most cases, a business is unable to continue business when they go under chapter 7. Individual may want the court to be declared legally to make their debts void. However, income may be on the rise after filing bankruptcy from any source, but it can’t be said that it is also the part of the bankruptcy.
Chapter 13
Chapter 13 is another type of bankruptcy. This is also the same as in Chapter 11. The debtor works hard to repay the debts to the creditors. The debtor has full control and ownership of the assets. The debtors also have a specific timeframe to repay the debts. This timeframe generally is for three to five years long plan. Some portion of the debt can be reduced and discharged on the basis of rising income of the debtors.
Chapter 11 And Chapter 12
These two chapters are most common in the United States of America. Additionally, there are two types of the chapter which is found according to different realities. These includes chapter 11 and chapter 12.
Chapter 11
Chapter 11 is a chapter in the bankruptcy code in the United States of America which works to control the reorganization of the business and is not able to pay off the creditor due to the present financial predicament.
Chapter 11 is for the most critical and troubled business. It is also one of the most complicated bankruptcy filings. Additionally, an individual may file bankruptcy under this chapter. In the state of chapter 11, the debtor has some portion of the business owners but works hard to pay off the creditors.
Chapter 12
Chapter 12 is only for the farm owners where the debtors are still in control of the assets. The debtors also work hard and make a repayment schedule to pay off the creditors. This chapter is not much more used in this country because the number of family farms and fishermen are less compared to small to large scale other business.
What Do You Need To Do To File Bankruptcies
Bankruptcy is really a legal process to pay off the debts for the people or a business who is legally unable to pay. It is important for him to seek to eliminate debts by any individuals, spouses, or incorporated companies. However, there are some steps to declare bankruptcy.
Check Your Financial Status
The first and most important step to file bankruptcies to assemble financial status. You need to bring detailed information as much as possible to close any loopholes by the creditors. More importantly, your spouse may file bankruptcy another way. You don’t forget to include information about this fact. However, it is important to include the following information before you are going to file your bankruptcy case.
Debts
You need to include your debts status and the payments on a monthly basis, interest rate, etc. Additionally, you have to present the name of the creditor, creditors’ status and your current balance to make sure you are in a fair mode.
Income
Income is the most important fact to explain your present and future financial prospect. You have to explain your income for the six months and the possible income in future may be also included. This income may include different sources like your side income, regular or full-time job. Other family member’s income may also be considered as income.
Assets and Property
Asset and property calculation here is also another important information that needs to be included. You may include the asset that you own. Assets are stocks, real estate, vehicles, cars, saving accounts, furniture and other things which are in your possession. These assets are valuable and can be sold in exchange for money. Personal possession can be referred to as a term to be exempt. It can’t be sold out under the chapter of 7 bankruptcy. Exempt may vary according to state. An only bankruptcy attorney may examine this term very clearly.
Explain Your Living Cost
Your living cost includes rent, food utilities, clothing, ironing, transportation, child care, medical expenses, and much more variable expense. It is important to calculate the average monthly or yearly expenditure that you have to bear.
Credit Counselling
There are different credit counseling agencies to counsel your credit history. Credit counseling must be stated in your petition and will help you be ready with your financial status. However, this type of credit counseling may take only one or two hours and may be available over phone or online. Without credit counseling, your petition may not be accepted. More importantly, credit counseling is one kind of research in a law that provides an insight on how to get back on track in this tough situation.
The credit counseling agency also will help you prepare related documents. Additionally, they know best which type of bankruptcy is eligible for you. For example, if you are eligible for chapter 13, they are ready to help with the payment schedule. One should understand the payment plan fully because payment is going to start no later than 30 days after your submission of the petition.
Meeting With Your Creditors
When a bankruptcy petition has been filed first and then accepted, the creditor generally will receive a notice explaining that you have presented all your debt in your petition. This notice also includes an automatic stay. However, there is a meeting with the creditors after three to six weeks later, which is organized by the trustee.
In the meeting, which is also known as 341 meeting, the lender sends a representative with a list of questions to ask you or the trustees. However, when you are married, it is mandatory to attend the meeting by or spouse. More importantly, you have to answer the questions by asked by anyone honestly and correctly to make sure you are not hiding anything else.
In this meeting, it is important to note that you are informed about the consequence of declaring bankruptcy and you have to take necessary steps to understand the effect of the reaffirming debt.
Automatic Stay
When you have successfully and correctly filed your bankruptcy petition, the automatic stay is an automatic injunction under the bankruptcy code that ensures the prohibition of further collection by the creditors on the basis of the fraud claim. More importantly, the creditors are ceased to step ahead with illegal proceedings towards your property.
In chapter 13, the creditors are also ceased to form any type of attempt to gain money from any party like co-signers or home mortgage.
When The Meeting is Going End
After the meeting, the creditors may ask the debtor for further information. He may also check the payment plan. In the case of any objection, they send any objection letter after 60 to 90 days from the meeting date. This objection must be addressed in the stipulated date or before proceeding forward. When the objection is solved or addressed, the petition goes ahead.
In chapter 7 bankruptcy, there is a liquidation process to your assets. After the liquidation of the assets, the creditors are paid by the trustees. In case you have no assets, the judge of the bankruptcy court will order a discharge order to the debtors stating that your debt has been discharged or wiped out by an official letter. After that, the lenders will be unable to force you to pay the money you owe.
In chapter 13 bankruptcy, when the creditors have not any objection to the payment plan, the judge of the court will approve your payment plan in a confirmation hearing. The hearing can be held within 45 days of the creditors meeting. However, after approving your payment plan, you will start to pay the payments to the trustees monthly or biweekly according to your favor. Then the trustees pay your creditor. If there is any remaining amount in which you have no ability, the judge will issue a discharge letter for that remaining amount.
Post-Bankruptcy Counselling
Post-Bankruptcy counseling is important to take for completing the final settlement of the debts. The case is you don’t inform to the trustees that you didn’t take post-bankruptcy counseling, your bankruptcy process won’t be completed or your remaining debts won’t be discharged. So the post-bankruptcy counseling is the finishing payment plan when you are required to undergo a post-bankruptcy credit counseling course to close the process of the bankruptcy.
File Alone or With The Help of The Bankruptcy Lawyer
Bankruptcy is a critical and complex issue, and most of the people prefer going with the help of the lawyer. There is a number of steps to go and there are also some important unknown facts to the common people about the process of filing a bankruptcy. In the case of any possible mistake, your petition may be disqualified and rejected. As the bankruptcy lawyer has extensive knowledge, and he deals with complex issues for a long time, it will be better to go with the help of the bankruptcy lawyer.
Going with the help of the bankruptcy lawyer can cost you only from $1,000 and $2,500. It is to be noted that in many cases, bankruptcy lawyer or bankruptcy attorneys don’t get payments on credit cards so you need to make sure you are not going out of the cash after declaring bankruptcy.
The series of bankruptcy lawyers is really one of the important steps to declare bankruptcy. The lawyer will examine and check the present condition and your personal situation. This is maybe the first meeting to declare your bankruptcy condition. The bankruptcy lawyer may also suggest more options to make sure you are going to resolve your bankruptcy issue.
It may also be easy to file bankruptcy at your own effort if you feel that you can handle it and you know every step and process very well. You can do that as it is a type of administrative process. In this case, you need to spend only $300 to $500. The cost may vary according to the location because the bankruptcy case is different in different states.
Low-Income Bankruptcies Lawyers
From the very start of filing for bankruptcy, one has to pay for the filing fee. But filing for bankruptcy is not easy always. It is totally a financial issue with legal procedures. One may need to go bankrupt lawyers. For this, it is important to spend time for justifying low income bankruptcies lawyers near your location. Luckily, there are many low-income bankruptcies lawyers near your location who can help the debtors in different ways to save you from the financial predicament. You may know details about the low-income bankruptcies lawyers.
Additional Consideration For Bankruptcies
However, there is some more additional consideration according to different realities. To declare bankruptcy, the most important task is to be honest and provide exact information. Any discrepancies may declare you are not in the process of bankruptcy.
Thumps in The Process
Whenever you have filed your bankruptcy petition, it can’t be expected that your petition has been granted or your debts have been declared as discharge permanently on a quick basis. Even, your creditors have any objection or any other wrong information may not cause hamper this fact. However, there are some facts that affect the bankruptcy process-
- The debtors are hiding exact information and the court has evidence
- The debtors are unable to provide exact tax documentation
- The debtor takes time always and causes unnecessary delay for any meeting or submitting documents
- The debtor is not serious about his condition and willingly hiding his important documents
- The debtors have been asked some question but there is no exact information according to the question.
- The debtor does not want to take part in the credit counseling program.
- The debtors always are violating the lawful orders
Bankruptcy And Your Spouse
Bankruptcy and your spouses can be another issue for married couples. The couples may file a bankruptcy petition on a separate basis due to financial conditions. Some couples may file for bankruptcy together because there is an opportunity to make payment together. This reduces the cost of separate filing and they also have co-signer each other.
However, it is not always good to go alone in the case of bankruptcy. It is also to be noted that being co-signer for both spouses cannot always a good plan. There may be some hassle in this case because both have to show the status of the assets.
Final Outline
Bankruptcy is really a tough reality in someone’s life. It is not expected anyway. But anyone may face this tough reality and they try hard to save from the clutch of this reality. It is really worth learning bankruptcy code, which can help someone take every step in the right way. Much information in this time can be a good job. More importantly, there are many bankruptcies lawyers who are also ready to help in this regard.