With the state of the economy lately, more and more Americans have either filed for or are considering the filing of Bankruptcy Chapters 7, 13, 11 or 15. For whatever reason that you may choose to file or not to file, you should be informed of the details. As always, consult with a qualified Bankruptcy attorney for legal advice.
Bankruptcy can be a means for you to get out of difficult and stressful financial times and it is something that you have to do when you can no longer afford to pay the debts that you owe. Bear in mind that there are many types of bankruptcy, but the most commonly filed form of bankruptcy is chapter 7 and a chapter 13.
Chapter 7 is the most common for the individual. It is the complete erasing of qualifying debt. The debtor is then released from all repayment obligations. Keep in mind that chapter 7 bankruptcies are very serious and should not something that is taken lightly.
While giving you an immediate fresh start in repairing your finances, it remains on your credit report for 10 years. You still will be seen as a high risk and you will also be noted as a person who is financially irresponsible.
Chapter 7 vs 13…
Chapter 13 is not as harmful to your credit. Though there are still marks against you, since you will be working to repay your debts on a payment plan, you do not look like you are financially irresponsible, though you are still considered a slight credit risk. With a chapter 13 you will be able to keep your home and they will not start selling your assets to pay back your creditors like you would in chapter 7.
In 2005 an act passed legislation that now makes it more difficult for individuals to receive a chapter 7 bankruptcies. You know need to do pre-filing credit counseling sessions and also post-filing financial counseling, so that you can get yourself back on the right track.
It is very important that you weigh all sides of the chapter 7 and the chapter 13 bankruptcies.
Filing for Chapter 7
If you are going to be filing for bankruptcy, you might be, or be forced to be, filing under Chapter 7. If you are a business, this means that the business is going to be ceasing operations and having a Chapter 7 Trustee appointed right away, who will sell all of the assets and distribute the money to the creditors. It might or might not mean that the people who work for you will lose their jobs. Sometimes, when a company is sold off, it is kept intact or partially intact, and business might proceed as usual, simply with a different person in charge.
Chapter 7 can also be filed by an individual. This is going to mean that you can keep certain property that is exempt. However, some liens, such as real estate mortgages, are going to be kept intact. Any assets that are not exempt are going to be sold off by the trustee in order to pay back the creditors. This is going to mean that the other types of unsecured debts that you have will be canceled. Even though most other types of unsecured debt are canceled, there are some that you are still going to have to be responsible for. This includes child support, most taxes, most student loans and any fines or restitutions that you are responsible for regarding any crime you might have committed.
If you file for bankruptcy, you are going to be able to start again because most of your debts will have been canceled. Of course, anything that you have of any value will have been sold, so you are going to have to start over when it comes to that as well. Another disadvantage is that you are going to have a record of the bankruptcy on your credit report for 10 years. It might mean that you aren’t able to get loans or other types of credit, but this effect could happen just as easily with high debts.
There are some things that you should consider before filing for Chapter 7. There are some cases in which you can avoid being forced to file on the grounds that it is abusive. You might be able to opt for Chapter 13 instead, which means you can pay off all or some of your debts if you have more time, and if this happens you won’t have to have your property and assets sold off.
Filing for Chapter 9
One of the kinds of bankruptcy is called Chapter 9, and this is municipal bankruptcy.
This began in 1934 during the great depression. This was enacted so that municipalities could file for bankruptcy in the same way that individuals and businesses could. The purpose of filing for Chapter 9 bankruptcy is that it will provide a municipality that is financial distressed with protection from the creditors, and allow it to develop further and figure out a way to clear its debts. In the same way that other bankruptcies work, when a municipality has filed for Chapter 9, their assets will be reorganized in order to pay back as much of their debt as possible. With this type, this means that either the old debts will be extended in the interest of the debt maturities and that the creditors will still get their money, just at a later time. Sometimes, it also means that the interest or principal on the debts can be reduced. Other times, it means that the debt can be refinanced by getting a new loan that will cover all of the old ones.
The thing that is different about Chapter 9 is that there will be nothing in the bankruptcy filings that say that the assets of the municipality have to be sold or liquidated in order to pay off the debts. This makes it very easy for a municipality to file for bankruptcy and figure out a way to get out of debt without having the legal issues regarding differences between states and their internal affairs that should not be regulated by the government.
A person or a business cannot file for Chapter 9. Only a municipality can, which is defined under the code as “a political subdivision or public agents or part of a state.” This includes cities, counties, school districts, towns, and even public improvement districts. Also included under this definition would be bodies that produce revenue, such as bridge authorities, or authorities that deal with highways or gas. When filing for Chapter 9 it is very important that you fit this definition because the specifics of Chapter 9 are meant only to provide this surface to a municipality, and not to just an individual or a business who is going through bankruptcy. It is designed to keep the country running as well as possible.
Filing for Chapter 11
Chapter 11 is a bankruptcy that happens when a business is unable to pay its creditors or take care of its debts. This is a federal bankruptcy that is filed with a federal court. A chapter 11 bankruptcy means that the business plans on trying to continue to be in business while it is filing. It means that the business is not going to go out of business, but that it is going to allow the court to reorganize its finances, including its debts and its contractual obligations.
With Chapter 11, a court can grand either a complete or a partial relief from most of the debts and obligations that the company has. This is done so that the company can begin again and can have a fresh start. What happens is fairly simple. The court will take the assets that the company has and divide them in order to payback its debts or its obligations. If the debts are greater than the assets, then the owners and stockholders of the business are going to end up with nothing. This means that their rights and interests in the company will be completely terminated. Then, the company is actually going to belong to the creditors, as a way of paying them back. This is the only way that the creditors can hope to get all of the money back that is owed to them, if the assets of the company are not enough to pay them back. It is done in hopes that the company will succeed in the future, and that the creditors will be able to make a profit off of it.
Basically filing for Chapter 11 means that you hope to keep the company in business. You hope that you are going to be able to find a way in the courts to sell off all of the company’s assets to pay back the creditors, and you hope that by doing so you are still going to be left with the company in the end. However, there is a risk that you are taking because if you can’t find enough assets to pay off your creditors, you are going to end up losing your company to them. The good news about this is that you are no longer going to be personally responsible for paying back your creditors. The bad news is that they are going to have your business and you are going to have to start from scratch in order to make your own living.
Filing for Chapter 12
When you are talking about bankruptcy in general, you are going to find that there are many ways to file for bankruptcy. In general, when you file for bankruptcy you are saying that you no longer have enough money to pay back your debts or to pay your creditors. If this is the case, you are filing for bankruptcy. The good news for you is that filing for bankruptcy is going to give you a fresh start. The courts will decide how your creditors are to be paid off, and you will no longer be in debt. The bad news is that it is going to reflect poorly on your credit for a long time. However, you will be able to begin to make money on your own that doesn’t have to go towards paying your debt, and this is good news because you are going to find you can start over again.
However, there are different practices when it comes to filing for bankruptcy, and there are different ways to file. These different ways are named after the different chapters in the Bankruptcy Cod of the United States Code. Chapter 12 is a piece of the code that is only available to family farmers and to fishermen who have gone through certain situations and end up with no money to pay back their creditors.
The Chapter 12 of Title 11 states that the bankruptcy filings of family farmers and fishermen are to be handled in a slightly different way than ordinary US earners. Chapter 12 has always been under fire, and was set to expire in 2004, before it was renewed and made permanent. It is similar to chapter 13, except for that it benefits the farmers and the fishermen.
The reason that family farmers and fishermen need a separate code to file bankruptcy under is quite simple. While most wage earners have jobs and businesses, many times the success or failure of farmers and fishermen can be completely out of their hands. Weather and natural disasters play a big part in whether or not a farmer or fisherman succeeds. Therefore, when a farmer or a fisherman is going to file for bankruptcy, these things need to be taken into consideration because there are going to be different allowances made for situations that are not under the control of the person who is filing for bankruptcy.
Filing for Chapter 15
There are several different types of bankruptcies, and Chapter 15 is only one of them. This is the function of bankruptcy when it comes to different countries. The reason that the United States added this part to the Bankruptcy Code is that a lot of the time what happens in one country regarding bankruptcy is often tied to either assets or information that can be found in other countries. When there are many different countries, and therefore multiple jurisdictions involved, things can get confusing. Chapter 15 can help to straighten these things out in such as way so that everyone know where the money is and where it should go.
Chapter 15 basically allows the US government and the bankruptcy courts to be able to get information about a company’s assets or a country’s assets. This is a good option for companies that try to keep some of their assets in another country so that they will be better able to file for bankruptcy. What this does is that it makes the proceedings for bankruptcy go much smoother and take up much less time and money than if there was no such thing as Chapter 15 to protect the assets of a company in general.
Chapter 15 sets up cooperation between the United States Courts and the foreign courts and representatives so that they can all take care of the interest of the person filing for bankruptcy together without having to deal with all of the red tape that goes along with filing for bankruptcy when several of the assets are located somewhere overseas.
It is a matter of discretion when it comes to whether or not the US courts will extend the assistance needed to the countries or companies in question. Most of the time, the US courts will have to take into consideration how the different jurisdictions relate to the matter at hand and what kind of action should be taken to get the bankruptcy done with as little trouble and drama as possible.
Remember that this is something that has been set up so that in general the process of gaining a bankruptcy and getting to take care of the assets that are overseas are easier to take care of.
Tips on filing for Bankruptcy – Things to Consider
Not a lot of people want to make the decision of when to file bankruptcy, but you’ll also find that there is some point where it just may have to be done. You’ll wan to keep in mind that bankruptcy will affect your credit rating and you’ll also have other ramifications.
Filing bankruptcy should only be a last resort when all other options have failed you. But when should you consider filing for bankruptcy?
You may also want to file bankruptcy when you are constantly borrowing money from one credit source to pay another credit source. If you need to start taking cash advances of more than $500 just to pay for living expenses.
You borrow to meet regular expenses like food and utility bills. You have stopped answering your phone because the only calls you receive now are from creditors.
Are there creditors that are threatening to sue you? They have even already taken some legal action against you. You will find that these all are signs that there is something terribly wrong and these are signs that you may want to consider filing a bankruptcy.
Then it comes to the decision of what sort of bankruptcy you need to file for. The most common are chapter 7 and chapter 13. With a chapter 7, you will find that it will wipe all your debt clean and it will also give you that immediate fresh start. Chapter 13, you will be making payments for three to five years.
However, you need to make sure that you consider filing for bankruptcy when you have gone through all of your other options. You’ll need to make sure that you think about your financials as practical situations.
Filing Bankruptcy and Divorce
If you believe that you and your partner are headed for divorce, and you both have a lot of debt between you, it might be a good idea to decide to file for bankruptcy before you begin to file for divorce. This will pave the way for the divorce to proceed much more easily because it will allow you to get rid of some of your debt and to clear the way for a clean break. If you can file for bankruptcy, then you can have a better idea of how to deal with the debts that do remain between the two of you. It will also mean that if your ex files for bankruptcy later on down the road, you can be protected because you are going to take care of your debts before the divorce.
The way it works is rather simple. When one or both of the spouses file for bankruptcy, all of the property that has been shared by both of them will become a part of the estate and will then be available to pay for the debts. This will also mean that you have been granted an automatic stay, which means that the creditors can’t hound you for money. Remember that this stay does not prevent you from getting spouse or child support from your ex. The next thing that will happen is that the bankruptcy court will decide what shared property is exempt from the bankruptcy, meaning that it cannot be sold in order to pay for your debts. Then, the divorce court can divide that property between you and your ex spouse.
If you are trying to negotiate property settlements, and also going through bankruptcy, you are going to be dealing with very complicated issues. Some of the debts that might be related to a property settlement might not be wiped out during the bankruptcy, so you will still need to pay them. However, these debts can be wiped out if you can show that you can’t pay the debt and still take care or yourself or your children, or that if you wipe out the debt it is going to be better for you than the harm that would be done to the people that you owe by not paying it. This means that if you think your spouse is going to consider filing for bankruptcy after the divorce is final, you need to make sure that your finances are squared away so that you aren’t going to be faced with any more debts.
Filing Bankruptcy and Your Taxes
When it comes to bankruptcy and taxes, there can be several serious things that you are going to want to think about. If you are going to file for bankruptcy, you are going to want to make sure that you are doing everything you can to save yourself as much trouble, money, and time as you can.
You should know that any income tax debts might be eligible for being taken care of under Chapter 7 or chapter 13. If you are willing to file for bankruptcy, this is one of five ways that you can get out of tax debt. However, you should remember that in order to get your taxes discharged by filing for bankruptcy, you are going to have to meet certain requirements, so you should make sure you meet them before you file for bankruptcy to get out of tax debt.
If you file for Chapter 7, you are going to be able to get fully discharged of the debts that are allowable. With Chapter 13, there will be a payment plan that is required so that you can pay back some of your debts, and the rest will be discharged. Remember that not all of the tax debt that you might have is going to be discharged if you file for bankruptcy. You have to meet five criteria in order to get your taxes taken care of.
These five criteria that you need to meet in order to get your tax debt discharged when you file for bankruptcy are all important. The first is that the date that the tax return was due was at least three years ago. The second is that the tax return had been filed at least two years ago. The third is that the tax assessment is at least 240 days old. The fourth is that the tax return cannot have been fraudulent. And the fifth is that you are not guild of tax evasion. If you can meet all of these criteria, you are going to be able to most likely get your tax debt discharged when you file for bankruptcy.
