Bankruptcy is a process designed by the federal government in an effort to help people, both businesses and consumers, to get rid of their debt. There are several types of bankruptcy that can be filed. In some types, the debts are paid out of assets owned by the company or person. In other types, the debts are reconstructed to help the person or company repay the debt in a way that they can do. Sometimes, they are called liquidations while other times they are referred to as reorganizations. In either case, they are a serious, and financially life changing event that should not be taken lightly.

Chapter 7, 11, 13: What’s With The Numbers?

There are different types of bankruptcy, each defined by a number that is representative of where the item is in the tax code. Here’s a look at the differences in each of these.

Chapter 7: This type of bankruptcy is called liquidation. To get the values from it any owned property is sold or liquidated. There are some types of property that are exempt from bankruptcy.

This exempt property changes from one state to state. Once the allowable property is sold, the value from it is used to pay down debts, as the court determines. Once everything is liquidated, in most situations any remaining debt is forgiven.

When looking at filing bankruptcy; it pays to do some careful research and seek help and advice from professionals.

Chapter 11: This type of bankruptcy is one for businesses. It is used for corporations and partnerships. Those that file this will file for a reorganization of their debts. Like Chapter 13, you will need to pay down your debts over a period of time, while all property is kept. Generally, the business is kept up and running, but debts are restructured so they can be repaid over time.

Chapter 13: This is a reorganization type of bankruptcy in which the debts you have are reorganized in such a way that it helps you pay them down faster and without as much added interest. In this type of bankruptcy, you will keep your property. You’ll need to establish a repayment plan with the court, which generally requires that the debt is paid off over a period of two to five years, depending on your needs.

Frequently Asked Questions

Questions always arise about bankruptcy. Here are some of the most common:

* Will I lose my home? Every state defines what property is allowable to keep during a bankruptcy (chapter 7) but in most cases, it is considered a secured debt. If you are in good standing with that lender, chances are good you’ll be able to keep the home as long as you keep making payments. To help repay your lenders some states will require you to liquidate the value of the home if there is a substantial amount of value in it. * Do I need an attorney? With the new bankruptcy laws that have been put in place, it is now not only common but necessary for you to have an attorney to help you through the process. They will help you meet guidelines and timelines and they will help you qualify to be a filer, as many people are finding out they do not qualify due to new laws. * Will it destroy my life? Bankruptcy is a serious undertaking which will place a black mark on your credit history for the next ten years. It will be more expensive to use credit and you may find it more difficult to make purchases this way.

In many situations, bankruptcy is the best thing for you. Be careful with using it though. New laws only allow you to file bankruptcy in dire situations.

Bankruptcy is shrouded in myth – one of the reasons it still carries a significant stigma. Bankruptcy myths arise mostly from the history we attach to bankruptcy, but also from the legal complexity and subtle variations in the process. It is simply impossible to know all the subtleties of bankruptcy law without studying it very carefully and for a long time. What makes it even more confusing when deciding whether to file bankuptcy is that bankruptcy law varies from state to state.

These factors have an major impact on how we view the process, how it affects our financial standing, what happens after bankruptcy, and how other people will view us if we file for bankruptcy. As we can see from a close study of bankruptcy in our modern society, many of the things we believe about bankruptcy are not remotely true.

Myth #1 – When you file for Chapter 7 bankruptcy all your debts are wiped out.

Unfortunately for the person filing for bankruptcy this is not true. Certain debts such as child support, alimony, government-issued or government-guaranteed student loans, and debts applied as the result of fraud will not be forgiven in a Chapter 7. Also when property loans or car loans are secured by assets such as your house or car, those loans will normally remain in place.

A Chapter 7 bankruptcy involves the bankruptcy trustee gathering up and selling the debtor’s assets – other than those which are exempt or are pledged to specific creditors, for example a mortgage or car loan. The bankruptcy trustee then uses the proceeds of those non-exempt assets to pay legitimate creditors. The net result is that the debts to those creditors are fully discharged.

Myth #2 – Everyone in town will know I’ve filed bankruptcy.

Yes it is true that anyone who wants to go to the trouble to discover who is currently filing or who has filed for bankruptcy in the past can probably get hold of that information fairly easily.

But the simple fact is that unless you are someone the media has a reason to feature or highlight, it is extremely unlikely that the news about your bankruptcy filing will reach anyone other than your creditors and perhaps a few close friends and family members.

While bankruptcy is a public legal proceeding, there is no one place where you can find acentral list of people who have recently filed for bankruptcy. The numbers are so high, the list changes so often, and the jurisdictions are so diverse that unless a publication or directory has a significant staff assigned exclusively to watching these figures they are simply not going to do it.

Myth #3 – When I file for bankruptcy everything I own will be sold.

This is probably one of the biggest concerns that people have about bankruptcy and the thing that convinces them not to file. They have vague visions of debtors prison in their heads and assume they will have to start from scratch – no house, no car, no furniture, no computer, ipod, camera, or even tools required to make a living.

If it was actually like this you can imagine that almost no one would file for bankruptcy. Actual bankruptcy laws are different from state to state. But every state has exemptions that protect certain kinds of assets from being seized by your creditors or even the courts. These include your house, your car, household goods and clothing and money in qualified retirement plans.

These are just three of the more widely held myths about bankruptcy. There are many others. If you are considering filing for bankruptcy you would do well to seek the advice of a bankruptcy attorney who specializes in bankruptcy cases. There is better way to get an adequate explanation of the laws in your state, and good, solid information about which course of action is best for you.

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Chapter 13 bankruptcy law is on occasion referred to as reorganization bankruptcy. It’s very different than Chapter 7 bankruptcy. In a Chapter 7 bankruptcy virtually all of your debts are extinguished. But, you must forfeit any belongings that aren’t exempt from seizure by your creditors. Under Chapter 13 bankruptcy law, you aren’t required to abandon any personal items. But, you’re expected to use your income to pay back some or all of what you owe your creditors. Your payments to creditors are made over time, typically from three to five years. The time frame depends upon the size of your debts and income.

Chapter 13 Bankruptcy Eligibility Prerequisites

Chapter 13 bankruptcy isn’t for everybody. Chapter 13 bankruptcy law calls for using your income to pay back some or all of your debt. So, you’ll have to show to the court that you’re able to fulfill your payment responsibilities. If your income is unpredictable or too low, the court might not allow you to file under Chapter 13 bankruptcy law.

If your total debt load is too high, you’re also ineligible to file under Chapter 13 bankruptcy law. Your secured debts can’t be greater than $1,010,650. A “secured debt” is one that gives a creditor the right to take away a specified piece of property (like your house or auto) if you don’t pay off the debt. Your unsecured debts can’t be more than $336,900. An “unsecured debt” doesn’t give your creditor the right to take your properties. An example of an “unsecured debt” is a credit card or a medical bill.

Commencing a Chapter 13 Bankruptcy

Before filing a Chapter 13 bankruptcy, you must go through credit counseling from an agency authorized by the United States Trustee’s office. These agencies are permitted to charge a fee for their services. But, if you can’t afford to pay the fee, they have to furnish reduced rate counseling and, in a few cases, free counseling.

Chapter 13 Repayment Plans

The most significant component of your Chapter 13 bankruptcy paperwork is your repayment plan. It identifies in detail how much money you’ll dedicate to every one of your debts. There’s no standard form for the plan. But, almost all courts provide their own forms.

How Much Will You Be Required to Pay

Your Chapter 13 plan must pay specific debts in full. These debts are called “priority debts” because they’re viewed important enough to jump to the head of the bankruptcy repayment line. Priority debts include child support and alimony, wages you owe to employees, and certain tax obligations. Additionally, your plan must encompass your normal payments on secured debts.

The plan must establish that any income you have remaining after getting to these compulsory payments will go toward paying off your unsecured debts. You don’t have to repay these unsecured debts in full. You just have to exhibit that you’re applying any unconsumed income towards their repayment.

How Long Will Your Repayment Plan Last

The duration of your repayment plan turns on how much you earn and how big your debts are. If your average monthly income during the six months before the date you filed for bankruptcy is more than the average income for your state, you’ll have to volunteer a five-year plan. If your income is less than the typical, you may suggest a three-year plan.

Regardless of how much you bring in, your plan stops when you repay all of your debts in full, even if you’ve not arrived at the three- or five-year mark.

What Goes On If You Can’t Produce Plan Payments

If you sustain a job loss after embarking on a payment plan or discover that you can’t sustain the payments on your Chapter 13 bankruptcy plan, the bankruptcy trustee may modify your plan. It’s even feasible that the court could allow for the discharge of your debts on the ground of hardship. Hardship may include the abrupt loss of a job due to a company closedown or a serious debilitating sickness. If the bankruptcy court won’t allow you to change your plan or give you a hardship discharge, you may be able to shift to a Chapter 7 bankruptcy.

How Does a Chapter 13 Case Conclude

After you finish your repayment plan, every leftover debt that’s eligible for a discharge is wiped out. But, before you’ll be able to acquire a discharge, you must prove to the court that you’re up-to-date on your child support responsibilities and that you’ve finished a budget counseling course with an agency approved by the United States Trustee. This budget counseling course is in addition to the required credit counseling you experience prior to filing for bankruptcy.

By the time you finish reading this, you will know what Chapter 8 bankruptcy is. To begin, let me tell you the basic concept of bankruptcy first. Basically, bankruptcy is a formal proceeding that allows an individual or business to get their financial debts under control. It is developed to help both debtors and creditors. In other words, bankruptcy is a helpful process that can allow you to get your debts back in order and turn your finances around.

There are many types of bankruptcies that can be filed but the type of bankruptcy you file on will have to depend on your situation. Basically, Chapter 9 bankruptcy is the type of bankruptcy that is reserved for municipalities.

Basics

The purpose of having Chapter 9 is to help municipalities who are financially in trouble. Usually, this happens because the budget is not controlled and therefore, it leads to one owing a lot of money. However, if a municipality faces financial difficulties, will be given a way out.

This is a protection of the public as much as a protection for the creditors. If a municipality goes under the people living there are going to suffer as well. Chapter 9 seeks to keep everyone from disaster.

Is Chapter 9 Bankruptcy the One For You?

A municipality in trouble is a town in trouble. The problems do not just affect the people running the town, but everyone living there. It is a matter of being responsible and doing what is right for the people.

By filing for Chapter 9, it allows a municipality to bounce back from its financial difficulties with minimal effect on the people. This is because the court allows debts to be paid in installments.

An advantage of filing for Chapter 9 is that you can avoid a shaky future and you may even save the town!

Filing Bankruptcy

If you are a municipality, you are expected to keep the budget under control. However, at times, this may seem impossible and you may have gone too far out. The only way to get your finances back into order is to file for bankruptcy.

By filing for Chapter 9, it allows the municipality to be responsible and pay the debts to protect the town. It is a win- win situation as it protects the citizens and the creditors will get their money back too.

Now that you are armed with this information, I am sure you know what Chapter 9 is about. One advice; even though Chapter 9 can help a failing municipality get back on its feet and start a better future course, it should be a last resort.

The attitude towards bankruptcy is changing gradually today. As more and more people go for bankruptcy filings, it is no more looked at as something negative. When the debtor is unable to pay back his or her loans they go for bankruptcy filing. This is basically telling the court that he or she does not have any resources to payback one’s debts. Both individuals and companies are allowed to file bankruptcy in the federal court. Sometimes bankruptcy filing can also be initiated by the creditors so as to retrieve as much money as possible from their debtors who is unable to payback their loan.

One of the negative effects of bankruptcy filing is to be seen in the credit score of the individual who files for bankruptcy. In order to get back the credit score one has to employ stringent bankruptcy repair strategies. Without any clear cut efforts towards bankruptcy repair, the credit score will not bounce to normal situation whereby creditors can start trusting you again.

One of the very bad effects of bankruptcy filing comes in the form of bankruptcy report which creates a deep scar in your credit records that lasts for 7 to 10 years. As long as it remains there, you will become an untouchable. However, with consistent efforts towards bankruptcy repair your credit score will start showing improvements gradually which will certainly be noticed by your bankers.

Many soon after their bankruptcy trauma tend to keep quite about their credit score because they realize that their report will continue to bear the negative remark irrespective of the efforts. However, this would be a negative approach; if you wait for the entire 7 years to pass by before you take any positive step towards your bankruptcy repair then you will be totally condemned by the bankers. The right time to start working on your credit score is immediately after your bankruptcy filing.

You do not have to do it all by yourself; there are experienced bankruptcy repair consultants who can assist you in the process of getting your credit score back to its feet. One of the first things you should do is to get a copy of the credit report and analyze it closely to have a better understanding of where you went wrong the last time and to see whether you have any specific spending pattern which needs to be avoided.

Sometimes, your credit report can have mistakes which has cost you dearly. In such scenarios you should attend to it immediately which will take you one step closer to bankruptcy repair. You must do everything within your limit to address any discrepancy in your credit report so that your credit score will not suffer unnecessarily.

As you can guess, now you will not be able to get a new unsecured credit card with your credit score, but you can apply for secured credit card that will give you a good head start for your bankruptcy repair. This way, you will be able to start building fresh credit report that will be favorable to you. However, you must remember that this going to be a very slow process.

All your efforts towards bankruptcy repair will certainly reflect in your credit score which will build trust among the creditors. Your only aim now should be to use every opportunity you can to build your credit score. Bankers and creditors will start noticing your efforts which will turn out to be highly beneficial to you.

Try and apply for unsecured credit cards and also for a car loan; you may not have your loans or credit card application approved the first time. This should not discourage you. This is just a test to see how your bankruptcy repair strategies are working and what your credit score is telling others about you. Try and apply for a car loan again after sometime and when you get your loan approved then you know that your credit score has some positive notes on your behalf. However go for additional loans only if you see that you have the necessary means to make your monthly repayments. A smart bankruptcy repair strategy will get your credit score back on the right track.

Ever wondered what Chapter 7 bankruptcy is? Well if you are, I think this article will help. Well, Chapter 7 bankruptcy is a type of bankruptcy that is available for people to file under the Bankruptcy Code. However, this type of bankruptcy is not available to everyone. Want to know more? Read on.

Who Can File Chapter 7 Bankruptcy?

Chapter 7 bankruptcy is available to individuals and some businesses. In order to file Chapter 7 assets should be limited to those that can be claimed as exempt.

Even though sometimes the court may rule that a person is not able to file a Chapter 7, at times, it may be one of the best moves you can make.

The Process

The process of filing for a Chapter 7 may be long as you are required to collect all the information about your debts and your financial situation. Other than that, you’re also required to meet with a counselor and attend counseling.

You will then be able to start filing out the proper forms and filing them with the court. Over the next few months or so you will be required to attend court and plead your case. The court will then decide if your bankruptcy is granted or not.

The whole process can last quite some time, but during the process you are protected from debt collection by creditors.

Any Risks Involved?

If you think bankruptcy is an easy way to clear your debts, think again. Recent changes in the bankruptcy laws has made filing bankruptcy more difficult and in some cases impossible.

You are at risk of losing your assets because they can be taken to repay debts. You are also going to end up with a damaged credit record. The effects of a bankruptcy can last seven to ten years and can really hurt your ability to get loans and other forms of credit in the future.

New laws may require you to file a Chapter 13 instead of a Chapter 7 if your income is deemed to be more than the set amount. The court can decide that a repayment plan is better for your situation instead of actually clearing your debts.

Now its time to put the knowledge to the test! You should always remember that bankruptcy is not an easy way out. And if you are serious about filing for Chapter 7, you need to be prepared for the consequences.

I don’t know a thing about you but I’ll bet that you don’t know much about bankruptcy laws. Well, if you haven’t known it yet, Chapter 13 is one of the many types of bankruptcy. Chapter 13 however, is no available for any situations. It is only available for certain situation and only for the best qualified.

Quick Outline of Chapter 13 Bankruptcy

So, who can file for Chapter 13? Well Chapter 13 can be filed by individuals who have a steady and secured source of income.

What exactly is Chapter 13? Chapter 13 is actually a repayment plan. Individual will work together with the court, and creditor to come out with a repayment plan which is based according to the individual’s income.

The Filing Process

A Chapter 13 requires you to first abide by the new bankruptcy laws and seek credit counseling. You will then file paperwork and the process will begin.

In the process, your income and debts are being looked at. A payment plan is then devised based according to your income. In order to continue with the repayment plan, both you and your creditors have to agree with the plan.

As you can see, this is a lot of work and also time consuming as there are a lot of paperwork to be done and also court hearings to attend. However, the best suggestion I can offer you is that you should have a lawyer who can help you with negotiations with creditors. This may not be easy but trust me, it is worth the trouble. This way, you have nothing to worry about.

This can take some time to finalize but in the end you are protected and your creditors are getting paid.

Things to Know About Chapter 13 Bankruptcy

Many people wonder why to file a Chapter 13. Since it is a repayment plan you are not getting debts wiped away so why not just do debt consolidation instead? The easy answer to that is the court’s involvement in the bankruptcy process.

Why court involvement? By having court involvement, you can have more protection and options. The court will ensure that you can afford the repayment. You are considered a willing party instead of being demanded for unreasonable payment plan you cannot afford.

Other than that, once you are in the process of bankruptcy, creditors are not allowed to pursue collections thus; you will be able to protect your assets.

Your goal? Start utilizing the knowledge you have acquired her but you also have to remember that there are many negative effect of bankruptcy so, is always best to avoid it. Try working together with your creditors if you feel that you are facing financial problems.