On the other hand, the chapter 13 leaves some scope for the debtors to continue with their existing business venture while repaying the reduced amounts of debts simultaneously as per the repayment plan as suggested by the bankruptcy court.

Hiring An Attorney

No matter which type of personal bankruptcy you are considering to go for, it is very important for you to find a good resource on iva’s, overview what you need and hire the best bankruptcy attorney to handle your case. When debts cross its limit, they become a huge burden and eventually result in mental harassment. You lose peace of mind and the collection calls contribute more in this mental harassment. In such cases, where no alternative option is available to you, filing for personal bankruptcy may make a good choice for you. By hiring an expert and experienced personal bankruptcy attorney who can ensure you your estate, you not only ensure a guaranteed freedom from financial and mental harassment, but you also get an excellent opportunity to make a fresh beginning.

The Reason For Filing Personal Bankruptcy

There can be a variety of reasons to file for personal bankruptcy, such as accidents, sudden illness entailing major medical expenses, child support expenses, divorce proceedings, credit card misuse, and much more. A chapter 13 bankruptcy attorney will first look into the reasons that forced you on the path of bankruptcy. The lawyers will study your case and they will get a solution for you on the basis of the facts and figures that pushed you towards this difficult and painful situation. Therefore, you should not try to hide any facts from your lawyer. Always remember the popular saying that one should never tell a lie to a doctor, teacher, and a lawyer. Any such attempt from your part will make your case weak and it will create unnecessary complications for you.

You also need to understand that you cannot hire a business bankruptcy attorney to handle bankruptcy cases of individuals because they are specialized professionals to handle only business cases. The specialization of the lawyers matters a lot. For individual cases, the right choice is to hire a personal bankruptcy attorney.

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.

What Are Personal Bankruptcy Laws?

The personal bankruptcy laws are the legal provisions that allow an individual to settle the debts they owe on much easier terms that fall within the means available to them. An honest individual can take advantage of the personal bankruptcy laws to give a fresh start to their financial life.

Ways To Use Personal Bankruptcy

There are two ways to use Bankruptcy services – voluntary and involuntary. As the term suggests, the voluntary personal bankruptcy is the procedure where the debtors himself or herself is filing bankruptcy petition. On the other hand, sometimes creditors in an effort to get their money back file a petition for bankruptcy against the debtors. If you are deeply drowned into debts and unable to think out a way to get out of this nasty situation, you had better file for personal bankruptcy yourself. Do not wait your creditors to file it for you because that will eventually maximize your trouble.

Advantages Of Filing Personal Bankruptcy

Those who are trapped in heavy piles of debts with all doors closed to pay off the debts can take advantage of the personal bankruptcy services. When you file a petition for bankruptcy, an automatic stay is legally imposed. This legal stay will save you from further harassments from your creditors to make payment. During the time while your personal bankruptcy is under trial, your creditors will not be able to take any non-bankruptcy actions that may include compelling you to make payments, etc. After you are declared as bankrupt, you can get relief from all your debts by settling them with your “non-exempt” resources and assets. This way, by filing bankruptcy, you get dual protection. While the bankruptcy case is pending, you get protection from the legal stay and after the bankruptcy is declared to you, you can easily release yourself from all kinds of financial responsibilities. Now you will have to start afresh.

Personal Bankruptcy For People With Regular Source Of Income

As per the bankruptcy laws, if you are among those who have a regular source of income, you cannot apply for liquidation bankruptcy. You will have to act according to the Chapter 13 Personal Bankruptcy law. As per this chapter, the court will propose you a repayment plan to pay off the reduced claims by the creditors. For example, you may want to pay 15 cents on each dollar and after the bankruptcy proceedings the court orders you to pay 25 cents on each dollar.

This way, your debts will be reduced to a very little amount. Now you will be liable to pay this amount of debt on a monthly schedule basis, as proposed by the court.

Filing bankruptcy is a legal process that is used by a debtor in an effort to obtain relief from the debts they owe to their various creditors. The various steps involved in filing bankruptcy include gathering complete facts and records regarding the debts you owe and other financial matters, hiring a bankruptcy attorney, filing various bankruptcy forms as asked by your bankruptcy lawyer based on the type of bankruptcy you are claiming.

2. What does it mean by being legally bankrupt?

If an individual or organization files a petition for bankruptcy and the court releases its judgment in their favor, declaring them as bankrupt, the debtors are completely or partially discharged from the debts they owe. There can be two scenarios when a debtor is declared as bankrupt. He or she may have to sell off all their declared assets in order to settle the debts they owe. On the other hand, the bankruptcy court may allow them to continue with their business operation while paying off their creditors partially on a monthly schedule basis.

3. Who can file for bankruptcy?

The individuals or organizations that are not in a position to pay their debts with the available means and assets can file for bankruptcy. However, here you should note that bankruptcy laws have become far stricter now and you will have to meet high certain standards in order to be eligible to file for bankruptcy. As per the bankruptcy laws in the United States, an individual, a business organization, municipality, or family farmers can file for bankruptcy.

4. I am unable to pay the debts I owe but I want to carry on the business I am running. Which type of bankruptcy is the best option for me?

You may choose to go for the reorganization or rehabilitation bankruptcy, as described in chapter 11, 12 and 13. In this type of bankruptcy, you request the creditors to reduce their claims. For example, you may offer to pay 25 cents for each dollar you owe. You can pay the reduced amount of debt on a monthly schedule basis. This way, you get a chance to stay with your business operations while paying off your debts simultaneously.

5. I have filed for bankruptcy and I do not want to be disturbed by the creditors meanwhile. What are the legal options I have?

When you file for bankruptcy, you will get an “automatic legal stay of your debts” until the court gives a judgment in your bankruptcy case. During this period, your creditors will not be able to take any non-bankruptcy legal actions against you. Your creditors will not be able to legally compel you to make payments or pursue lawsuits etc. The procedure of this legal stay involves sending notice to your creditors to stay away from taking certain non-bankruptcy legal actions against you. If your creditors still try to make improper contacts to you, do inform your bankruptcy attorney regarding the same.

6. What is bankruptcy conversion?

Bankruptcy conversion is a procedure that allows you to transform from one type of bankruptcy claim to another. For example, if you have filled and submitted the chapter 7 bankruptcy form and now you want to claim for chapter 13 bankruptcy, you will have to cancel the old form and submit the new one with relevant details. However, bankruptcy conversion is not a free-of-cost service. You will have to certain amount as conversion fee.

7. Is it possible for the creditors to file a bankruptcy petition against their debtors?

The clause for involuntary bankruptcy allows the creditors to petition a court in an effort to get the debtors declared as insolvent so that the creditors could recoup as much money from the debtor as possible. However, the provision of involuntary bankruptcy petition is allowed only under Chapters 7 and 11. The creditors cannot file a petition for bankruptcy against their debtors under Chapter 13. What is more, if the court rejects the petition for involuntary bankruptcy, the debtor can ask the creditors to pay for the attorney fees and costs and various other expenses depending upon the specific case.

8. How many bankruptcy forms does a debtor need to fill and submit in order to file a petition for bankruptcy?

Your bankruptcy attorney may ask you to fill out any or all of the following bankruptcy forms.

•Voluntary Petition – If you are filing bankruptcy yourself
•Involuntary Petition – If the creditor has filed the court petition
•A list of Creditors that hold twenty biggest Unsecured Claims
•Summary of Schedules
•Schedule A – Real Properties you own
•Schedule B – Personal Property you own
•Schedule C – Property you have Claimed as Exempt
•Schedule D – Creditors that hold Secured Claims
•Schedule E – Creditors that hold Unsecured Priority Claims
•Schedule F – Creditors Holding Unsecured Non-priority claims

9. What are the expenses involved in filing bankruptcy?

While you are filing bankruptcy, you may have to pay for the following expenses.

•Bankruptcy Attorney fees
•Conversion fees – If you are changing the type of the bankruptcy claim at a later stage, such as converting the claim from chapter 13 to chapter 7
•Fees for credit counseling
•Amendment fees
•The reopening fees
•The splitting fees;
and much more depending upon your specific bankruptcy case.

10. What is Reaffirmation?

There might be the case when the certain debts you owe have been discharged after the court declared you as bankrupt, but you still want to pay the same. For example, you might have purchased a car on a car loan and you do not want to return the same even after the declaration of bankruptcy by the court. This is known as reaffirmation. In order to get you reaffirmation agreement, you will have to convince the court that the agreement is voluntary and nobody is illegally forcing you to do the same and that the reaffirmation agreement is in your best interest.

11. What are the situations in which the court may refuse to grant bankruptcy to the debtor?

Bankruptcy denials might be caused because of the following reasons.

•The debtor and the bankruptcy attorney hired by him or her could not properly explain the facts and records.
•The various declarations made by you are contradictory to each other.
•You could not obey the lawful orders imposed by the bankruptcy court.
•You tried to conceal or manipulate facts and records regarding your financial matters.
•You are a convict of bankruptcy fraud. For example, you tried to destroy or transfer certain properties in an effort to save those properties to be used in debt settlement.

12. How much does bankruptcy cost?

The cost of bankruptcy depends upon the nature and amount involved in your specific case and the kind of bankruptcy you are claiming. For example, if you have claimed for personal bankruptcy under chapter 7, all you may have to pay is just a small flat fee. On the other hand, if you have claimed for bankruptcy under chapter 11, it may cost you several thousand dollars.

13. What Are The Alternative Options To Avoid Bankruptcy?

Following are some of the alternative options.

•Hire a financial manager that could manage your finances and help you regain control of the same. Once your expenses and incomes are in your control, you can easily put your finances back on track.
•If you are a homeowner, you can refinance the same and use its equity to settle the huge piles of debts. You can even take benefit of the tax deductions in this regard.
•If you are availing any credit repair or debt consolidation services, make sure that company is highly credible.

14. Why should I file for bankruptcy?

In order to take a right decision in this regard, you must evaluate the following.

•The amount of debt you owe and the intensity of its impact on your financial life.
•Whether or not you are capable of paying off the debt.
•The risk factors involved in the same.
•The pros and cons of filing and not filing bankruptcy.
•Its affect on your social status and whether or not you will be able to live happily with that.
•The expenses involved in filing bankruptcy.

15. Am I eligible to request for bankruptcy insurance?

Yes, if you are among one of the following.

•If you are a self-employed person and have been declared as bankrupt.
•If you are a self-employed person and the court has approved your obvious incapacity to pay off the entire debts and have allowed you to reorganize the things to pay off the debts partially.
•If the bankruptcy has been declared for a commercial company and you are one of the business managers, administrators and working partners associated with that company.

16. Do I need to hire a bankruptcy attorney to help me with the bankruptcy proceedings?

Because of the complex nature of the bankruptcy laws, it is not an easy cake for a common person to be well aware of all the intricacies involved in the same. This is where only an efficient and experienced bankruptcy lawyer can help you out. Again, keeping in view the very fact that new bankruptcy laws are added very frequently, the need and role of an expert bankruptcy lawyer cannot be ignored.

What Is Chapter 11 Bankruptcy?

Chapter 11 bankruptcy can be defined as a process in which a trustee is appointed by the bankruptcy court to assess the debts the company owes and the assets the company owns. The main reason why corporations file for chapter 11 bankruptcy is that their finances get mismanaged and this eventually results in piling of the debts until it becomes too much to pay off by the company. The duty of the appointed trustee is to help the creditors get their money back in a timely manner. The chapter 11 bankruptcy is very much like the personal bankruptcy. The only difference is that in corporate bankruptcy, the bankruptcy court usually allows the companies to keep running their venture and they appoint a trustee to help the company get their finances back on order in order to help the company repay the creditors in a timely and efficient manner.

What Happens After Chapter 11 Bankruptcy Is Granted To A Company?

When a company files for chapter 11 bankruptcy and it is granted the same, as its first impact, the current stockholders of the company lose their rights and they get nothing. Now, as per the orders by the bankruptcy court, the company’s creditors get control of the company with the help of the trustee appointed by the court. When creditors take control of its business, the profit-making capabilities of the company are retained. The corporation provides thousands of jobs and by retaining the company’s capacity to make profits, the bankruptcy court also saves thousands of persons from losing their jobs.

The Debate Regarding Chapter 11 Bankruptcy

The chapter 11 bankruptcy has also been criticized by many because according to them, the company gets undue advantage because of the same. Many people do not like the idea of letting a company run its business even after it has filed for bankruptcy. Chapter 11 bankruptcy allows the company to cease paying its debts and use the money to manage the finances and regain its profit making capabilities. This may give undue advantage to the company over their competitions. There have also been instances when companies have taken undue advantage of the chapter 11 bankruptcy. It has emerged as a great solution for those companies who want to get their debts organized while remaining in the business and creating revenue.

Overall, despite the criticism that chapter 11 bankruptcy has faced from time to time, it is an effective method to save some good companies and the jobs of thousands of people associated with the same.

One of the most important things that you must be thoroughly aware of is that the bankruptcy laws change from state to state. However, it also does not mean that every state has a different bankruptcy code. Bankruptcy code is same, but the only difference lies in the way they are interpreted in various states. Therefore, while you are shopping around to choose the best bankruptcy attorney for you, you will have to make sure that the bankruptcy lawyer you chose is thoroughly aware with way the bankruptcy laws have been interpreted in particular states. One simple example of the variation of the bankruptcy laws in various states is that some states will allows the debtor to keep their homes even under chapter 7, while under the same chapter of bankruptcy code, in other states, all the assets including the home owned by the debtor is liquidated in order to settle the creditors’ claims with the money collected. In addition, you should also note that not all the bankruptcy laws are different. Most of them are federally mandated without exception.

In chapter of the bankruptcy laws, in the bankruptcy code, as defined by the federal court has different set of laws related to bankruptcy. Some chapters allow the individuals and the companies to continue with their business operations while other chapters force liquidation of the assets to pay off the debts. If you are aware of the various bankruptcy laws, specific to your particular state, it will make things much easier for you during the bankruptcy proceedings in the bankruptcy court.

The Risks Covered By Bankruptcy Insurance

There are several causes that can lead your business to certain unexpected huge losses. Such causes may include the following:

•Business interruptions
•Lawsuits by employees or customers
•Customer injuries
•And other litigations

All business losses caused by any such reason or reasons are covered under the bankruptcy insurance policies. The bankruptcy insurance mainly covers the following for a self-employed person.

•Depending upon your specific bankruptcy situation, the bankruptcy insurance may provide you the protection of your rights to child benefit and health care. But, you can get such protection for as much as four quarters. What is more, you do not even need to pay the contributions that year.
•If you have taken a bankruptcy insurance policy and you become bankrupt, you may also be provided a monthly allowance for the first six months. Depending upon your specific bankruptcy situation, this period may be less or more.

Who Can Apply For Bankruptcy Insurance?

Following people can apply for bankruptcy insurance.

•All self-employed persons who were granted bankruptcy. But, here, you must note that in order to be eligible to request for the bankruptcy insurance, personal bankruptcy is allowed only one time during the career. If you have faced bankruptcy a couple of times during your entire career so far, you will not be able to take advantage of the various bankruptcy insurance policies.
•All self-employed persons who have not been declared as bankrupt but are not able to pay off their debts because of the huge losses in their business venture are also eligible for bankruptcy insurance.
•If bankruptcy has been declared for a commercial company, the working partners, administrators and business managers can also apply for bankruptcy insurance.

Who Is Not Eligible For Bankruptcy Insurance?

If any of these things apply to you, you will not be eligible to take advantage of the bankruptcy insurance policies.

•You are a self-employed person and you have become bankrupt more than one time during your career.
•A criminal court has convicted you because of your bankruptcy.
•You are a convict of bankruptcy fraud. Bankruptcy fraud is the manipulation and concealment of the facts in order to organize your incapability to pay off the debts you owe to the various creditors.

How To Request For Bankruptcy Insurance

Requesting for bankruptcy insurance is easy. You can request the same from your social security fund. While you are requesting for bankruptcy insurance, make sure that you keep in mind the following things.

•You will have to submit your request before the end of the quarter following the quarter in which in which you were declared as bankrupt. For example, if your bankruptcy was declared on Mar 20, 2006, you will have to submit your request for the bankruptcy insurance before Jun 30th 2006.
•Likewsie, you will have to submit your request before the end of the quarter following the quarter in which in which your business activities were suspended because of your genuine incapability to pay of the debts.

This way, we can see that the more bankruptcy information you have, the better you can take advantage from the various bankruptcy services.

Do Not Cross Your Budget

If you want to get your financial life untouched from the hammer of personal bankruptcy, the first and most important thing that you should do is not to cross your budget. You will have to learn to live within your means. Stay away from all such financial activities that can put you into debts. If you are using credit cards, you will have to very wise in charging the same. You must inculcate a habit to review your budget. Cut down on your expenditures wherever possible. I must add that more than sixty percent of the bankruptcy is followed by huge credit card debts. Credit card debts rise very fast because of the high interest charged by the credit card companies. Therefore, if you can manage without credit cards, it is just great.

Early Identification of the debt problems

Filing for bankruptcy is a situation that comes only if you realize things at a very late stage. If you are capable enough to identify the various debt problems at an early stage and get a solution for the same, you will never see face the heavy nights of bankruptcy in your financial life. You will have to learn to be proactive to the problems associated with various kinds of debts. You can put it in another way that you will have to control your debts much before your debts start controlling you. If you identify your debt problems at an early stage, you will have more time to put your finances back on track. The reason why most people claim bankruptcy is because of their habit of being hasty with their debt problems. This leaves no time for them to regain control of their finances and they eventually end up filing bankruptcy.

Impacts of filing bankruptcy

Some people have the misconception that filing for bankruptcy gives them an opportunity to re-decorate their financial life by getting away from old credits and acquiring new ones. Well, this is not how wise people think. It is very important for you to understand that filing for bankruptcy has very long lasting negative impacts on your financial life. You may have to struggle hard in order to regain control of your finances. Therefore, even if you are deeply drowned into debts, you are advised to first talk to your creditors and get to some common terms. If the creditors are ready to work out some arrangement for you, it will be a great help for you to avoid bankruptcy. You can also take certain initiatives from your side. For example, you may try paying off the debts by getting a part time job or by selling your assets.

If you want to avoid filing for bankruptcy, you can also avail the services of a debt consolidation or debt settlement company. Always remember that bankruptcy should always be the last option for you. It is important for you to understand that bankruptcy services is not an option you should choose to go for, rather it is an option that you are forced to go for.