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Bankruptcy is one option to consider in order giving yourself a fresh start, when you have more debts than you have assets. There are in fact many types of bankruptcy provided under the law but the most common is Chapter 7 bankruptcy, which is also known as liquidation.

When filing under Chapter 7 bankruptcy, all your assets, excluding those that are exempt under the law of your state, are dissolved and liquidated. Generally, the person tasked to do this is the court-appointed official, called a trustee.

All in all, the vital task of the trustee is selling your properties and using the proceeds to pay your creditors. After doing such, the court will then cancel many of your remaining debts, thus affording you a fresh start to life.

Here is a step-by-step guide to filing a bankruptcy under Chapter 7 bankruptcy:

Step 1: Decide whether you should file bankruptcy or not.

Filing bankruptcy is a personal decision, influenced by many factors, such as the amount of serious debts and your ability to meet the original payments or pay the full amount. For starters, when you are broke, it is never a nice experience getting harassed by creditors for debts incurred. For another, your decision to file should not be made for the sole purpose of putting a stop to your demanding creditors.

This is a significant point as secured creditors may apply for relief from stay, thus allowing them to continue their efforts to repossess or foreclose even though you already filed for bankruptcy.

Step 2: Get an attorney

While the law on Chapter 7 bankruptcy does not need individual consumers to hire an attorney who would represent them in court, it is still advisable to ask for legal help, particularly concerning critical decisions involved in bankruptcy.

Step 3: Comply with the legal requirements.

File your petition with the bankruptcy court serving in your area. If you are a business debtor, then file with the bankruptcy court in the place where the business was organized or has its principal place of business or principal assets. Your attorney should be able to advise you on how to deal with these required legal forms.

Step 4: Pay the necessary fees.

As with any other court cases, there are certain fees required, such as:
Case filing fee
Miscellaneous administrative fee
Trustee surcharge

Upon filing, you are usually asked to pay these fees to the clerk of court.

Note that the number of installments is limited only to four. Additionally to that, you are also required to make the final installment no later than 120 days after filing the petition.

Step 5: Notice to the creditors and meeting.

After filing your petition for bankruptcy under Chapter 7, paying the necessary fees, and complying with the legal requirements, an automatic stay is granted to you by operation of law. This stay will efficiently stop most collection actions against you and your properties. This means that as long as the stay is in effect, creditors cannot initiate or continue lawsuits, wage garnishments, or even telephone calls demanding payments.

After the bankruptcy case has been filed, the bankruptcy clerk will give notice to all creditors whose names and addresses you provided. Then, the case trustee will hold a meeting of creditors between 20 and 40 days after you filed your petition.

Step 6: Cooperate with the trustee.

The case trustee has a vital role in a bankruptcy case. His primary responsibility is to liquidate your nonexempt assets in a manner that maximizes the return to your unsecured creditors. He does this by selling your property, if it is free and clear of liens and as long as it is not exempt, or if it worth more than any security interest or lien attached to the property and any exemption that the debtor holds in the property.

In view of the broadness of a trustees power, it is significant therefore that you cooperate with the trustee. Provide any financial records or documents that the trustee requests and answer questions, which the trustee is necessary to ask at the meeting of creditors under the Bankruptcy Code.

Step 7: After the discharge

If all goes well with your Chapter 7 bankruptcy case that is, no one files a complaint objecting to the discharge or a motion to extend the time to object the bankruptcy court will issue a discharge order relatively early in the case, about 60 to 90 days after the date first set for the meeting of creditors

A discharge order is an order issued by the bankruptcy court, releasing you from personal liability for most debts and preventing your creditors from taking any collection actions against you. As a rule, excluding cases that are dismissed or converted, individual debtors receive a discharge in more than 99 percent of Chapter 7 bankruptcy cases.

For someone filing under Chapter 7 bankruptcy, a discharge of almost all of your debts is the ultimate goal. With the release of all your debts and creditors stopped from pursuing any further collection actions against you, the opportunity for a fresh start is apparent.

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Bankruptcy is a process of the federal court that is aimed at helping both businesses and individuals in clearing up their debts and repaying under the protection given by the bankruptcy court. There are basically two types: liquidation and reorganization.

Liquidation bankruptcy, under bankruptcy code chapter 7, occurs when you plead the court to have your debts discharged. Some of your properties will then be liquidated or sold by the bankruptcy court, returns of which shall be divided among your creditors. This type of bankruptcy proceeding lasts for four to six months which is quite fast and only one appearance at the courthouse is necessary. It is very convenient and doesn’t require payments stretched over time.

Chapter 7 bankruptcy code isn’t available to everyone, though. You may won’t benefit from it if in the past six to eight years, you have benefited from a bankruptcy discharge. Likewise, if after examination of your income, expenses, and overall debt, it was found out that the other type of bankruptcy proceeding is more appropriate, then you can’t insist on pursuing this kind. Veterans who are now disabled and who incurred their debt at the time of their active duty are almost automatically allowed to file. In addition, those people whose debts are caused by running a business are qualified as well. For those people not belonging to any of these categories, certain criteria must be met.

The criteria has been affected by the new rules imposed on bankruptcy. One of the considerations is your current monthly income which in turn will be compared against the median income for a family of similar size in your state. This isn’t your income at the time of your filing. Instead, it is your average income for the past six months before filing. Social Security benefits system like retirement and disability benefits aren’t included in the computation. If your income appears to be enough to support the other type of bankruptcy proceeding in spite of permitted expenses and payments for child support, tax debts, and others, liquidation bankruptcy is unfortunately not allowed.

Many people, if given a choice, would prefer this type since repayment of a portion of the debt is unnecessary. You may lose some of your properties but some courts permit some sort of a leeway that doesn’t take all to give you something to start with afterwards.

On the other hand, reorganization bankruptcy, usually under Chapter 13, happens when you file to a bankruptcy court a plan on how you intend to settle your debts. You indicate how much each of your creditors will get, depending on your finances. There will be a three- or five-year repayment plan, only after which can you be discharged of your debts, if any still remains. At times, however, due to obvious financial difficulties, the court itself decides to give a discharge earlier than planned and this is what usually happens.

An additional requirement for both types of bankruptcy is completion of credit counselling conducted by an agency recognized and approved by the United States Trustees office. This helps you look closely at the situation at hand and identify if bankruptcy is really essential. This allows you to see several possibilities of informal repayment which you may have overlooked in the past. Even if such is obviously impossible, counselling remains a major requirement. Furthermore, completion of post-counselling is required after the proceedings. This aims to teach you financial management to avoid encountering the same situation in the future. The bankruptcy discharge will not be released unless this is fulfilled.

Bankruptcy may be beneficial for both the debtor and creditor. This is a way of recognizing ones responsibilities and mistakes that led to the financial difficulty. The entire process takes into consideration both parties interests and leads to the development of an action plan that fulfils them. As such, this law shouldn’t be abused by any debtor thinking that a court is there to intervene.

Bankruptcy, although generally advantageous, must be considered as a last resort. You should, in all circumstances, work hard to be in full control of your finances to avoid being estranged in difficulties. Discipline is indeed a very crucial trait that must be maintained at all times.

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• Bankruptcy Defined

The very word “bankruptcy” puts fear into many people’s hearts. For years, the word has been equated with being destitute, being unable to pay bills and being financially insecure. But is that all that bankruptcy is about? The truth of the matter is that many people simply don’t understand what bankruptcy really is. For many people, bankruptcy is a way out of a bad situation and a hand up when they need it most. It is also a life changing experience. These questions and answers are designed to teach you about bankruptcy, what it is, what it can do and what it cannot do.

What is bankruptcy?

Bankruptcy is a legal declaration of the inability to pay your creditors. This does not mean you have no money. On the contrary, many people who declare bankruptcy have enough money to live on. Instead, it means that you do not have enough money to match your basic living expenses and pay people to whom you owe money. How much this is can vary from person to person because every person needs a slightly different amount of money to meet their living expenses. Since there is no set amount, bankruptcy is often granted by a judge.

How do I apply for bankruptcy?

Laws very from state to state, of course, but applying for bankruptcy isn’t very hard. At its base, it simply requires the filling out of bankruptcy paperwork. This paperwork will ask you about various items, such as your current income and your current assets. Using this paperwork, the bankruptcy judge will decide if you qualify for bankruptcy and how it will work for you. You may want to speak with a lawyer before filling out this paperwork. A lawyer will be able to inform you of what kind of bankruptcy would best suit your needs and will help you identify some of the particulars.

How does bankruptcy help me pay my debts?

There are several different types of bankruptcy, all of which function in different ways. Businesses have several different versions of bankruptcy, some of which are useful for individuals. In general, should you need to file for bankruptcy, one of three things will happen. Either you will be required to pay a fixed amount per month until your debts are paid off, your assets will be liquidated and sold off to pay your debts and you will pay monthly to cover the rest, or your assets will be liquidated and sold off and then you will be absolved of any further debt. With any of these options, creditors can not attempt to collect above and beyond the agreed payment.

How does selling off my assets work?

The selling of assets is handled by a court of law. A court official will take stock of what you own, find the costs on the current market and sell your assets to the appropriate markets. The other option is that your assets could be sold at auction. Both options have their good points and bad points. In the case of auction, it is possible that more money can be earned from what’s sold than the items are actually worth, thus taking a larger chunk out of your debt. However, it is possible that your assets could sell for less than they are worth. Selling at market prices assures that you will at least get what each item is worth.

What happens to businesses that file for bankruptcy?

Essentially, the same thing as happens to individuals. Either the business is shut down, their assets liquidated and their creditors paid off or they set up a payment plan and pay a certain amount per month. The only difference is when it comes to Chapter 13 bankruptcy and what is considered “disposable income.” For businesses, disposable income is generally taken to mean “profits,” although there is still some wiggle room here. Some less than honest business people will quickly give themselves a raise before filing, thus making it look like they make less profit than they do. However, barring small details, it is essentially the same for a business as it is for an individual.

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by marsmet47

New Bankruptcy Laws ? Why To Think Twice Before You File Bankruptcy

At one point, filing bankruptcy was extremely easy, and generally hassles free. To begin with, the bankruptcy law was established to offer a new beginning to those who had financial difficulties. In April 2005, Congress made extensive changes in U.S. bankruptcy law with effect from October 17, 2005. Called the “Bankruptcy Abuse Prevention and Consumer Protection Act of 2005,” it spells trouble for Americans struggling with debt problems.

This new bankruptcy law and thanks to those who abused the privilege, new bankruptcy laws are stricter and have more requirements than ever before.

Some Facts on Bankruptcy

1. Between 1995 and 2004, bankruptcy filings doubled, while in that same period, credit card industry profits tripled.

2. For people 60 or older, 85% of bankruptcies are caused by medical bills or loss of job.

3. A divorced woman is 250% more likely to file bankruptcy than a married woman.

4. Approximately half of all bankruptcies are filed because of medical expenses due to lack of health insurance and inadequate coverage.

5. The median income of bankruptcy filers is ,000.

Here is a look at some of the changes within the new bankruptcy law and how these changes may affect your decision to file bankruptcy.

Bankruptcy Law Credit Counseling

Now, with the new bankruptcy laws, no matter rather you decide to file for Chapter 7 bankruptcy or Chapter 13 bankruptcy, you are now required to attend credit counseling. This must be done before you go to file for the bankruptcy, by a court approved credit counseling center.

You need to obtain a certificate and in some cases, a repayment plan. You will then have to submit all of this to the courts, as proof you have met the requirements under the new bankruptcy law.

After filing bankruptcy, you will then be required to submit a certificate showing that you have attended credit counseling, yet again, learning to manage your personal finances.

New Bankruptcy Law Chapter 7 Filings

The requirements for filing a Chapter 7 bankruptcy have also changed. Now, thanks to the changes in the laws, you have to prove your income. If you have a higher income than stated by the median income within your state, you will likely have to file a Chapter 13 bankruptcy instead of a Chapter 7.

You will also be required to take what is called a means test. This is used to determine rather you are capable of making repayments under a Chapter 13 repayment plan bankruptcy.

Bankruptcy Law Chapter 13

Now, with the new bankruptcy law, you may find, if you have to file for Chapter 13 bankruptcy, that you are paying more than you can comfortably live with. There are specific guidelines to calculating how much you have in disposable income and assets. This will depend on your income for the last six months before you filed bankruptcy and not your current income.

What is more, property value will be regarded with its real value, what a store might be able to get for that property. What this means, with the new bankruptcy law, is that depreciation is taken into consideration, which will include the condition and age of the property being sold.

New Bankruptcy Law Residency

The new changes in law require certain residency stipulations that were not required before or are stricter. You see, states have homestead exemption, meaning that certain laws apply to residence of that state. However, now with the new law, the residency requirements increase from three months to two years, before these laws can apply to filers.

The worst aspect of the new bill is the use of IRS “allowable” expense schedules for determining your monthly budget. In short, people attempting to file bankruptcy are in for an extremely rude shock. No more cell phones, cable TV, high-speed Internet access, movies, meals out with the family, and anything else beyond the minimum allowable expenses as determined by the IRS and the courts.

Hundreds of thousands of Americans are going to discover the reality of this tough new bankruptcy law, and they are going to forgo the court system of filing bankruptcy in exchange of out of court settlement. Banks are also eager to settle with consumers for 50 cents on the dollar or less as it is beneficial for them because of following reasons:

a. Lump-sum of 30-50% today is far better than the same amount collected over 3 to 5 years.
b. Under Chapter 13, it will take the creditors 3 to 5 years to recover that 30-50%.

It is important to understand the new bankruptcy laws and how they apply to you before you file bankruptcy in any state. Make sure you do your homework and know what is best for you before you file.

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As time goes by, businesses financial needs change and some business owners find themselves in positions where their expenses have begun to overcome their income and achieving small business debt relief seems an impossible task.

In 2006, around 1.9 million American businesses filed for bankruptcy. Many of these businesses did not have the resources needed to avoid bankruptcy. Bankruptcy not only ruins your business credit, it makes it next to impossible to get a loan. In some cases, you may find it difficult to regain credibility as a serious company and sometimes you will never be able to recover from this, because clients and even employees will loose any trust in you.

- Bankruptcy is not the way to achieve small business debt relief -

There are lots of resources. Before you jump into the hands of despair and file bankruptcy or just call it quits in life, take time to learn your options and see if there is anything to be done and still hope in order to achieve small business debt relief and remember to always learn from these situations.

In cases where debt overwhelms owners and managers, many will consider dealing with the concerns that come with collection agencies and enroll in programs such as small business debt relief consolidation. This type of programs, oriented towards small businesses that are barely starting to gain strength within the market, help them regain financial stability and taught them how to avoid possible similar situations.

Small business Debt relief consolidation can take unsecured loans such as credit card debt, student loans, and vendor bills and lump them together in one place where the interest rates are lower, the monthly payments are not as high, and that are much easier to manage than ten bills all at once. Due to the fact that this has become such an important part of small business debt relief in the modern age, there are many different options to consider when it comes to credit consolidation and debt negotiation.

- Methods for small business debt relief -

It sounds strange to get a loan in order to achieve small business debt relief, but the faster you can deal with those high interest rates the better for your current situation. Visit our web site and receive information about this process, let our professional counselors advice on how to manage your situation. There are two types of loans, secured and unsecured, the secured loans will obviously have lower interest rates because of the collateral that secures them, due to that the lender company does not take as much risk as with an unsecured loan. A property is the best asset to ask for a secure loan as long as you have the financial capacity to recover the asset. All this will help you reach small business debt relief.

- What options to consider in order to achieve small business debt relief -

One of the options to consider is a small business debt relief consolidation program. This is a good option for those who find themselves paying off several loans as well as large credit card debts. All of these debts are put in one spot, which often has a longer period to pay off than the previous bills entailed. Based on the fact there will be less money needed to pay off the bills that you are immediately concerned with, you will find that there is actually money left over once the monthly payment has been made. Note that small business debt relief consolidation is not a cure-all and will not eliminate the debt that has been accumulated; it is merely a way to make the payment situation more manageable while also freeing up some extra money each month in order to get closer to small business debt relief.

We have different articles on interesting topics and experiences from current and former clients with our programs. Take a look at related topics of different situations on Small Business Debt Relief that people can fall into and how to keep yourself a debt free person.

Check these links to learn more:

http://www.curadebt.com/settlement/business-debt-negotiation/business-debt-settlement-negotiation.asp

http://www.curadebt.com/about.asp

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