Bankruptcy laws can also be used by businesses to get their house in order. These laws are covered under Title 11 of the United States Code (the Bankruptcy code). The relevant chapters are chapter 7, chapter 11 and chapter 13.   

Why Avoid Bankruptcy

Legal recourse should be used as a last resort. Avoiding bankruptcy is a better option; prevention they say is better than the cure.
There are many reasons why you should avoid bankruptcy like a plague. It affects your credit score bringing it down by 200-250 points. Unfortunately, this negative entry stays for the next 7-10 years making it very difficult to qualify for new loans. Chapter 7 bankruptcy is bad news for your property too. Certain assets are not exempted under chapter 7 bankruptcy making them attachable property once bankruptcy is filed.

The scope of Chapter 7 bankruptcy is limited and it does not extend to all debts. Some debts like student loan, back taxes and other unpaid dues do not fall under the ambit of bankruptcy law. In such cases it is best to avoid bankruptcy.

Bankruptcy laws create a lien against your property. This gives your creditor a claim on your property. Chapter 7 bankruptcy affects your personal finances as well making it difficult to buy or rent a home/car.

It is very tough to get an approval for credit/loan after you have filed for bankruptcy. Even unsecured loans are hard to come by. Credit card loans are available but at a high cost. The interest rates on these loans are too high to make it financially viable. 
 
Retirement plans are also partially affected. 401 k plans are a nice place to park your investment up to a million dollars; anything above will be used for clearing debts.  

How To Avoid Bankruptcy

You can avoid bankruptcy by any of these plans:

• Debt settlement
• Debt management
• Debt consolidation  program
• Payday loan consolidation

Debt settlement reduces the amount due by as much as 40-60 %. However, you will need to negotiate with the creditors or the debt collecting agency. If you are not comfortable with the idea of dealing with your creditors, you can seek help of professionals.

Debt management is another method of clearing all dues. This is done by keeping all dues current. This gives savings in the form of interest charges. Interest charges often form a huge chunk of all dues and clearing dues become easier when it is waived off.

Consolidating all debts is another way of clearing dues. Payment is easier as the dues are cleared by monthly installments. The burden of interest charges is also reduced as there is one single amount to pay. This gives saving in transaction charges as well.

If you are struggling with several payday loans then you can consolidate them. This makes payment easy and also saves interest charges.
 
Being debt free is important because it gives you peace of mind and freedom from financial hassles. The best way to avoid bankruptcy is financial discipline; avoiding unnecessary expenses, keeping borrowing at a low, paying off debts in time and so on. A debt free today ensures a better tomorrow.

The Only Case When Student Loans In Bankruptcy May Be Treated As Dischargeable Debts

The only case when student loans in bankruptcy may be treated as dischargeable debts is the situation when you can prove that the loan amount is imposing undue hardship on you and your family. However, this is not an easy thing to do. In order to make the student loans dischargeable, you may have to show the following.

•You are physically challenged and are unable to work.
•There are no chance of you getting some gainful employment in future.

New Bankruptcy Laws For Student Loans

Earlier, privately funded loans (including the ones you’d get at 24Hour New Haven Bail Bonds) that were not guaranteed were dischargeable debts under chapter 7 bankruptcy. However, now because of the new bankruptcy laws, even the privately funded student loans get the same protection as the other loans guaranteed by the federal government or nonprofit institutions.

What To Do If Student Loans Are The Major Part Of The Debts You Owe

If student loans are the major part of the debts you owe, you are not recommended to file for bankruptcy because you are very much unlikely to be granted bankruptcy. The only way you can make the student loans in bankruptcy dischargeable, is that you will have to prove the undue hardship the loans are imposing on you. For this, you will have to file a separate motion and you will have to convince the bankruptcy court regarding the same. Of course, that is not something very easy to do. That is the reason why it is not recommend for you to file for bankruptcy if student loans cover the major part of your debts.

Repayment Alternatives For Student Loans In Bankruptcy

Following are some of the repayment alternatives that the bankruptcy court may suggest you.

•You will have to talk to your lender and work out a repayment plan. The lenders may offer you a longer period to repay the loan. You may also ask them to reduce the amount of the monthly installment by promising to increase the amount, as your financial position gets better.
•The bankruptcy court may interfere and ask the lender to provide you some time to regain control over your finances and defer repayment till then.
•Another bankruptcy alternative is debt consolidation.

Overall, because of the non-dischargeable nature of the students loans in bankruptcy, it is better not file for bankruptcy. Instead, you should talk to your lenders and work out some repayment plan.

Chapter 7 Bankruptcy

When you consult the best bankruptcy attorney, he/she will tell you that personal bankruptcy can be filed under Chapter 7 or Chapter 13. Under Chapter 7 all the non-exempt assets of the debtor are liquidated to pay off the creditors. The debtor party is; however, allowed to keep some exempted property, like clothes, some real estate, personal things, food, tools of trade, etc.

Chapter 13 Bankruptcy

Under Chapter 13, your personal bankruptcy attorney will inform you that you would be put on a payment plan. In order to qualify for Chapter 13 you need to have a stable source of income so that you can make the payments according to the payment plan. You will be able to retain all your properties as long as you make the payments. Once you have made all the payments you will obtain a discharge from all debts incurred.

Once you have filed Chapter 7 or Chapter 13, your creditors can no longer undertake any action. In other words your creditors will be forbidden from calling you, going for foreclosures, repossessions, etc.

However, when you file for bankruptcy you must remember that there are certain debts that one cannot do away with under both the chapters. Alimony, child support payments, federal and state taxes, student loans, fines, and some other debts cannot be liquidated. Your personal bankruptcy attorney will tell you beforehand about all the debts that you need to pay for.

Today filing for bankruptcy is not a simple thing. When people file for business bankruptcy, it is understood that one would need a business bankruptcy attorney. However, many people still make the mistake of taking up their own case when filing for personal bankruptcy. It is very important that one understands that whether it is business or personal bankruptcy, it cannot be done without the assistance of a bankruptcy attorney who specializes in that particular field.

It is important to hire a bankruptcy lawyer because bankruptcy is a difficult nerve-wrecking time. The whole volume of paperwork can leave you stressed out if you tackle it alone. With the personal bankruptcy attorney by your side you will feel more comfortable and relaxed.

Chapter 11 Bankruptcy

Chapter 11 bankruptcy is another form of personal bankruptcy and can be a great solution for those who have a regular source of income and still have hopes to get their finances managed for which all they need is some debt-free time. It is a heavy burden of debts that is stopping them from actively participating into their business activities and put the same on the path of profit. In usual circumstances, especially in genuine cases, the bankruptcy court delivers its judgment in the favor of the debtor. The court asks the creditors to lower down their claims to reduce the burden of debt on the debtor while the debtor is asked to make a repayment plan to pay off the creditors’ reduced claims. The bankruptcy court also appoints a trustee to keep an eye on the business activities of the debtor. They help the debtor to get their financial matters re-organized. They will also see if the payments to the creditors are being made in timely manner as per the repayment plan approved by the bankruptcy court.

Chapter 7 Bankruptcy

The chapter 7 bankruptcy is a form of personal bankruptcy where people do not have any hope to reorganize their financial life. In this case, the bankruptcy court orders the trustee to liquidate all the assets owned by the debtor and the amount thus collected is used to pay off the creditors’ claim as per the priority status if any.

Once a debtor is granted personal bankruptcy, it will affect his or her credit life for the next 10 years at least.

Things You Need To Know

Following are some of the important things that you must know regarding the Ohio bankruptcy laws.

•It is also important for you to understand that unlike other states in America, the bankruptcy cases in Ohio do not follow federal bankruptcy laws. Instead, they follow the specific Ohio bankruptcy laws.
•The bankruptcy laws in Ohio deal mainly in the federal statutory law as described in the in Title 11 of the United States bankruptcy Code.
•There are two courts in Ohio that handle all the bankruptcy cases of the state – Ohio Northern Bankruptcy Court and Ohio Southern Bankruptcy Court. Both these courts are federal bankruptcy courts.
•You can also download the all types of Ohio bankruptcy forms from a form provider’s website on Internet. There are separate bankruptcy forms for different types of bankruptcy cases. For example, if you want to file chapter 7 bankruptcy, you will have to fill chapter 7 bankruptcy forms.
•Following are some of the properties that are exempted under Ohio bankruptcy laws.
◦Residential property – $5000 or less
◦One car or other vehicle – $1000 or less
◦Cash – $400 or less
◦Home appliances, like refrigerator – $5000 or less
◦Jewelry – $3500 or less
◦Furniture or other household commodities – $1500 or less
◦Other personal properties, things that you can live without – $400 or less
◦Trade equipments – $750 or less

Purpose Of Filing Bankruptcy

There are basically two main purposes to claim bankruptcy.

•If the debtor is declared as bankrupt by the bankruptcy court, they get the opportunity to rebuild their dilapidated financial life, as bankruptcy relieves them of most of the debts. A bankrupt individual or organization is not legally obliged to pay most of the debts he/she owes.
•If certain debts have been excluded from the bankruptcy discharge, the debtors are responsible to pay the debts on priority basis but only to the extent of the available means with them. The available means are the non-exempt assets submitted by the debtor to the bankruptcy court.

Types Of Bankruptcy

There are basically two types of bankruptcy – Liquidation Bankruptcy and Rehabilitation or Reorganization Bankruptcy. In liquidation bankruptcy, the assets of the debtors are seized and sold off to pay the debts they owe to their creditors. On the other hand, reorganization bankruptcy allows the debtors to carry on with their venture and pay the debts in monthly installments. Here, you must note that the debtor is not supposed to pay the entire amount. All they have to pay is the reduced claims made by the creditors. Depending upon your specific situation, you can choose the type of bankruptcy services for you. Your bankruptcy attorney will help you reach a wise decision in this regard.

Legally Imposed “Stay”: Protection Of The Debtor

When a bankruptcy petition is filed either by the debtor or the creditors in the bankruptcy court, the creditors cannot take any non-bankruptcy legal action against the debtor because of the legally imposed “Stay” during the time while the bankruptcy case is pending, awaiting judgment. The non-bankruptcy legal actions may include forcing the debtor to make payments of the debts they owe, pursuing lawsuits, garnishing wages etc.

Bankruptcy Fraud

Bankruptcy fraud is an attempt to manipulate with the financial facts by the debtors in an effort to save them from paying off the debts they owe. Such manipulation of facts may include concealment while declaring the available means and assets, destroying or concealing some relevant documents, false declarations in the United States Bankruptcy Court etc.

Bankruptcy Laws

As per the bankruptcy laws in the United States, six types of bankruptcy have been mentioned under six chapters.

•Chapter 7 Bankruptcy – Personal bankruptcy for both individuals and businesses
•Chapter 9 – municipal bankruptcy
•Chapter 11 Bankruptcy – rehabilitation or reorganization bankruptcy
•Chapter 12 Bankruptcy – reorganization bankruptcy for family farmers and fishermen
•Chapter 13 Bankruptcy – rehabilitation or reorganization bankruptcy for people who have a regular source of income. Sometimes also termed as Corporate bankruptcy
•Chapter 15 Bankruptcy – international bankruptcy cases

The Role Of Bankruptcy Lawyers

Because of the complexity involved in the bankruptcy laws, the importance of hiring a bankruptcy attorney to bring bankruptcy help for you cannot be ignored. The bankruptcy lawyers are the people who are well aware of all the ins and outs of the various bankruptcy situations and the various steps in filing bankruptcy. Again, new bankruptcy laws also get included from time to time, which is very difficult for a common man to be aware of. Only an efficient and experienced bankruptcy attorney can help you in this regard.

Things you need to know about the chapter 7 bankruptcy forms

If you are planning to file a court petition for chapter 7 bankruptcy, it is important for you to understand that there is a wide range of chapter 7 bankruptcy forms that you need to fill up and submit to the bankruptcy court. The main purpose of filing these forms is to provide complete information regarding the assets and means of income available to you and the amount of debts that you owe. The bankruptcy court also considers your day-to-day expenses before taking any final decision.

How much do the chapter 7 bankruptcy forms cost

If you are purchasing the chapter 7 bankruptcy forms from the bankruptcy court, it will cost a substantial amount of money. However, the amount may vary from state to state. The good news is that you can also get these bankruptcy forms for free, as they are now easily available as free download from several websites run by various law organizations. You can download the chapter 7 bankruptcy forms from these websites and get a print of the same. Such forms are also accepted by the court.

How to fill the chapter 7 bankruptcy forms

It is very important for you to understand that as per the chapter 7 bankruptcy code, after filing bankruptcy, you are not allowed to continue with your business operations. All your assets will be seized and liquidated by the court in an effort to settle the debts you owe to various creditors. Therefore, you will have to be very careful while filing the various sections in the chapter 7 bankruptcy forms. It is better to fill these sections under the expert guidance of your bankruptcy attorney. Your attorney knows the best, how to present your bankruptcy before the court in order to defend it in the best possible manner.

Here again, I must add that you should not try to conceal or manipulate with the information you are providing to the bankruptcy court through the chapter 7 bankruptcy forms. Any such attempt will be treated as fraud and it will make things more complicated for you and you will find yourself into much deeper financial trouble.

What Is The New Bankruptcy Law Change All About?

The latest bankruptcy law change is the addition of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 to the bankruptcy court of the United States.

When Did The Last Bankruptcy Law Change Come Into Effect?

The last bankruptcy law change in the United States bankruptcy code came completely into effect on October 17, 2005. However, the new bankruptcy laws in this regard was passed by Congress and signed into law by President Bush in April 2005. Some of the changes came into effect immediately, but it took one hundred and eighty days for the new bankruptcy law changes to come completely into effect.

What Is Bankruptcy Abuse Prevention And Consumer Protection Act Of 2005?

As per the new bankruptcy law change, now those who want to file for chapter 7 bankruptcy will have to pass a means test. The purpose of this means test is to assess whether your current monthly income is above the median income in your state. If your current monthly income is less than the median income of your state, you can qualify to apply for the chapter 7 bankruptcy. On the other hand, if the income is above the median income of your state and you are able to pay off your debts to the extent of at least hundred dollars a month, you will not be able to file for chapter 7 bankruptcy. In that case, your bankruptcy case will proceed under Chapter 13.

Is It Important To Show Federal Tax Returns To File For Chapter 7 Bankruptcy?

Since the time the new bankruptcy law change has come into effect, it is not essential for people applying for chapter 7 bankruptcy to show the federal tax returns from the last tax year. Therefore, if you have not paid taxes for the last year or for the last few years, you will have to pay the taxes first in order to be eligible for the chapter 7 bankruptcy.

Credit Counseling Is Also A Must

As per the new bankruptcy law change, now it has become mandatory for you to go through some sort of credit counseling on your own expense. It is also important for you to understand that the credit counseling you go through must be a government-approved program. It is better if you have also participated in a government-approved financial management education program. This will help you qualify for filing chapter 7 bankruptcy easily.

Types Of Bankruptcy Laws Taken From The Bankruptcy Code

As per the bankruptcy code, at present, there are four main types of bankruptcy laws. These bankruptcy laws are popularly known as chapters. The four main chapters in the bankruptcy code include chapter 7 bankruptcy, chapter 11 bankruptcy, chapter 12 bankruptcy an chapter 13 bankruptcy.

How Does The Bankruptcy Code Help Persons In Deep Debt Troubles

The various bankruptcy laws in the bankruptcy code have been designed in a way to protect people with bad financial position and deep debt troubles from unreasonable hassles that might be forced by the creditors. For example, when a debtor files for any type of bankruptcy, a bankruptcy stay is imposed by the bankruptcy court. This bankruptcy stay protects the debtor from the undue activities from the creditors. For example, the creditors cannot force the debtor to make the payment while the proceedings for the bankruptcy are running in the court. Any such activity from the creditors will be treated as illegal and the debtor can take action against them. However, the purpose of the bankruptcy code is not to protect only the debtors. The bankruptcy code has been carefully designed in order to stop debtors from doing any kind of bankruptcy fraud. New bankruptcy laws are added to the bankruptcy code from time to time in order to fill the loopholes that might be used by the debtors to perform some kind of bankruptcy frauds.

Is The Bankruptcy Code Same In All The States?

The bankruptcy code varies from state to state. Therefore, it is important for a debtor to make sure that the bankruptcy attorney they are hiring is completely aware of the specific bankruptcy code of the state. However, it does not mean that the states have the power to change the bankruptcy code. The basic bankruptcy rules are the same in all the states. What makes the real difference is the way the various bankruptcy laws are interpreted in every state.

If there is a change in the bankruptcy code, the change will come into effect in all the states.