Bankruptcy Information--an Overview

Good bankruptcy information is hard to find.

Bankruptcy is one of the hardest, ofttimes even traumatic, obstacle that can be faced in life. Sometimes due to unpredictable medical expenses, changes in employment or other unforeseen factors, bankruptcy is a last-ditch option for persons who face insurmountable debt, foreclosure and other unyielding financial woes.

Bankruptcy is an unfortunate challenge that can happen to anyone - from the young entrepreneur to the most established businessman. Since the economy is always changing, along with the stock market, thousands of persons can't say they live in complete safety any longer.

How it Works

Debtors file for specific types of bankruptcy for specific reasons. A debtor who files for Chapter 7 bankruptcy is generally seeking to discharge all of his/her debts. The average Chapter 7 case runs about four to six months, from petition date to discharge date.

Chapter 7 bankruptcy is often the better option for those whose debts, such as credit card debt and medical bills, are largely unsecured. So, if you don't have many assets, your your earning are below the median, and the lion's share of your debts are unsecured, Chapter 7 bankruptcy could be your best option.

Usually, a debtor who files Chapter 13 is employed and is seeking to retain his assets while negotiating a payment agreement with the bankruptcy court to help pay off his creditors. The person will make a Chapter 13 plan, where he agrees to make timely payments to the Court for a term of 36-60 months. This should provide the debtor enough time to pay back the predetermined debts.

Chapter 11 bankruptcy filings are sometimes reguarded as "strategic". To put this another way, management may wish to reorganize their finances for strategic reasons, not simply for the sake of balancing books. Chapter 11 is reorganization, as opposed to liquidation. Debtors may "emerge" from a chapter 11 bankruptcy within several months or within a few years, depending on the amounts owed and complexity of the bankruptcy.

Plans

In all cases of bankruptcy, plans are presented, creditors vote, and the court makes thousands of reviews until a decision is agreed upon. If the plan can't be be confirmed, the court may do one of two things: liquidate the business under Chapter 7 or dismiss the case.

When your plans are accepted, creditors are assigned priority by a court. Once your assets are redistributed, you will be free from most of your obligations, even if your debts are not fully paid off. Creditors are paid according to the portion they agree upon. The smaller the settlement, the quicker they will be repaid.

Conclusion

Bankruptcy can be a real stress relief if you are in a tight spot, but it is important to understand what has brought you to that point. If you declare bankruptcy and then continue without changing your spending habits, you are fated to end up in the same situation all over again.

Declaring bankruptcy is not a decision to be taken lightly, but we can help you sort out your options, review potential options, and then make a decision on how to proceed.

It is a legal chance to get a fresh start.

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