The Basics of Bankruptcy
The method in which consumers and businesses can terminate or repay a certain portion or all of their debts is known as bankruptcy. This can be done under the shelter of the federal bankruptcy court. Bankruptcy is categorized into two types - liquidation and reorganization.
Chapter 7 bankruptcy stands for liquidation. It is so called because here, the bankruptcy trustee takes possession and sells off some of the debtor's holding in order to pay back some of the debt. However, the debtor has the complete right to keep the property protected as per state law.
Chapter 13 bankruptcy deals with reorganization. It is more common than Chapter 7 proceedings. In this bankruptcy code, the debtor is allowed to keep all of his or her property. Although, here the debtor has to create monthly payments over a tenure of 3-5 years. Until a several part of the entire amount of debt is repaid, the process continues.
A few things should be considered before filing for bankruptcy. First the debtor should make sure of the fact that there are no other alternatives. This method can continue for a period of 7-10 years, so it should be thought out very absolutely by the concerned individual. The debtor should get consumer credit counseling from an entity approved by the U.S. Trustee within 6 months of the date of the filing of a bankruptcy condition. This counseling session takes place under the quick sight of Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA).
absolute research should be conducted by the debtor before filling. In situations like this, the debtor should hire a lawyer. The debtor should try to find a firm where he or she can directly contact a lawyer. After the lawyer has been appointed for the case, then the debtor must go through all the details of the case with the lawyer. This is done in order to find which chapter of the bankruptcy code is preferable, taking into deliberation the financial state of the debtor. Here, the lawyer is too intended to help the debtor in successfully completing the BAPCPA test.
After the fee is fixed with the lawyer, filing of the supplication takes place. Once this is done, the debtor gets a mail notifying him or her about the date for meeting the creditors. This meeting is considered extremely important as it allows the trustee to make sure of the truth that the debtor has provided real answers on his or her bankruptcy petition, and that the debtor also understands and agrees to the terms and conditions before filing for bankruptcy.
After every preliminary act before filing a bankruptcy has taken place, the debtor should not use credit cards. Even if they do so, they should be definitely several of the fact that they have the financial efficiency to repay the money owed. Because, if the debtor is not efficient to repay the debt, he or she might not be able to discharge the debt as the creditor might challenge him or her through a legal suit in their bankruptcy case.
Chapter 7 bankruptcy stands for liquidation. It is so called because here, the bankruptcy trustee takes possession and sells off some of the debtor's holding in order to pay back some of the debt. However, the debtor has the complete right to keep the property protected as per state law.
Chapter 13 bankruptcy deals with reorganization. It is more common than Chapter 7 proceedings. In this bankruptcy code, the debtor is allowed to keep all of his or her property. Although, here the debtor has to create monthly payments over a tenure of 3-5 years. Until a several part of the entire amount of debt is repaid, the process continues.
A few things should be considered before filing for bankruptcy. First the debtor should make sure of the fact that there are no other alternatives. This method can continue for a period of 7-10 years, so it should be thought out very absolutely by the concerned individual. The debtor should get consumer credit counseling from an entity approved by the U.S. Trustee within 6 months of the date of the filing of a bankruptcy condition. This counseling session takes place under the quick sight of Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA).
absolute research should be conducted by the debtor before filling. In situations like this, the debtor should hire a lawyer. The debtor should try to find a firm where he or she can directly contact a lawyer. After the lawyer has been appointed for the case, then the debtor must go through all the details of the case with the lawyer. This is done in order to find which chapter of the bankruptcy code is preferable, taking into deliberation the financial state of the debtor. Here, the lawyer is too intended to help the debtor in successfully completing the BAPCPA test.
After the fee is fixed with the lawyer, filing of the supplication takes place. Once this is done, the debtor gets a mail notifying him or her about the date for meeting the creditors. This meeting is considered extremely important as it allows the trustee to make sure of the truth that the debtor has provided real answers on his or her bankruptcy petition, and that the debtor also understands and agrees to the terms and conditions before filing for bankruptcy.
After every preliminary act before filing a bankruptcy has taken place, the debtor should not use credit cards. Even if they do so, they should be definitely several of the fact that they have the financial efficiency to repay the money owed. Because, if the debtor is not efficient to repay the debt, he or she might not be able to discharge the debt as the creditor might challenge him or her through a legal suit in their bankruptcy case.
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