One of the most debilitating things someone can go through is filing for bankruptcy. No one thinks this possible could happen to them until reality sets in and bankruptcy is the last resort. This usually happens when someone is unable to keep up with their financial obligations such as car loans or credit card payments. Not only is it rough on the debtor (or the person who owes the money) but it is hard on the creditor as well (the person, business or municipality to which the money is owed).
While it is usually the debtor who files for bankruptcy, there are the rare occasions when the creditor might do so. This is called involuntary bankruptcy and generally occurs when the creditor is owed a very large sum of money. Creditors have little comfort when trying to collect debts, and therefore are somewhat relieved when someone files for bankruptcy because, no matter how long it might take, they will get their money back.
When someone files for Chapter 7 bankruptcy, their assets are combined and then doled out to the creditors. This form of ?instant gratification? is most favored by creditors since they get their money up front. However, when the debtor files for Chapter 13, the creditors are receiving money on a fixed payment schedule. It may take longer to collect what is owed, but they will get the money. In these cases, bankruptcy creditors are almost like loan sharks; they are always trying to get their money. On the other hand, bankruptcy is frowned down upon by creditors because they are afraid they will never get paid.
The Chapter 7 bankruptcy process is the easiest of all such processes. It's often referred to as straight bankruptcy. Chapter 7 is a total liquidation process. The debtor will turn over all non-exempt property to the trustee who then will convert it to cash for distribution to the creditors. The debtor will receive a discharge on all debts usually within 4 months. In the vast majority of these cases the debtor has no assets that he would lose so Chapter 7 will give that person a relatively new fresh start at life again.
The following reasons are the most common for filing bankruptcy:
? Unemployment
? Large medical expenses
? Seriously overextended credit
? Marital problems
A recent academic study reported that medical bills caused half of bankruptcies in the United States.
Chapter 7 will erase all but the following debts for a person proceeding through this process:
? Child support and alimony
? Personal injury
? Student Loans
? Income tax debt.
There has been much recent controversy surrounding the new bankruptcy laws, and especially the means test. The simple truth is that there are more requirements under the new laws and the unfortunate result of some people required filing chapter 13 instead of Chapter 7. However, for the vast majority of filers Chapter 7 is still be available with actually little extra effort. A qualified and experienced bankruptcy attorney will be able to assist a person through the Chapter 7 filing process and all the other tests and requirements in the new bankruptcy law.
Forms For Filing Bankruptcy
Why should you consider bankruptcy alternative?
Bankruptcy has many undesirable consequences that will trail your life for long. It will remain on your credit report for nearly 10 years due to which no reputed lender will consider you as a borrower. There is a lot of negative publicity involved with a bankruptcy as well.
The advent of technology has made available information and help for a debtor who is considering bankruptcy alternative with a simple click. The debtors must research before they choose a bankruptcy alternative to ensure that it does not have much worse consequences.
Bankruptcy Alternatives:
•Consolidation loans: You can consolidate all your debts into one affordable and easy to manage monthly payment with consolidation loans. These loans speed up paying time and reduce your monthly bills to a great extent. Consolidation loans will also help get harassing creditors off your back and help you avoid bankruptcy.
•Out-of-Court Settlement: The debtor can also opt to settle his/her unsecured debt at a reduced amount through an out-of-court settlement. Independent advisors who work with various companies will help negotiate an out-of-court settlement with your creditor.
•Individual Voluntary Agreement (IVA): IVA stands for Individual Voluntary Agreement. It was introduced as a part of the Insolvency Act of 1986 and is a legally approved debt solution. When you opt for an IVA as a debt solution, you enter in to an agreement with your creditors. An Insolvency Practitioner helps to formulate your IVA. It will help freeze your high interest debts and ensure that you are debt free in five years or less without any negative publicity.
•Credit Counseling: Credit counseling agencies will deal with your creditors. They will negotiate lower interest rates and comfortable repayment options to suit your pocket. Credit counseling will offer all the information and help you need to deal with your debts.
Whatever you choose as an alternative to bankruptcy, act fast! There are a number of online services which can help you with your queries. They will be able to achieve the results that you were unable to achieve on your own. Apart from avoiding bankruptcy right now, it is important to understand how you can avoid the pitfalls of debt in the future.
Log on to Bankruptcy Alternative for information and support on bankruptcy alternative
Both Legal Helpers & Reethi Rai are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Legal Helpers has sinced written about articles on various topics from Bankruptcy Law, Bankruptcy Law and Finances. Legal Helpers is a debt relief agency helping people to file for bankruptcy relief under the bankruptcy code. We're one of the largest consumer bankruptcy firms. Bankruptcy. Legal Helpers's top article generates over 90500 views. Bookmark Legal Helpers to your Favourites.
Reethi Rai has sinced written about articles on various topics from Mortgage, Filing Bankruptcy and Debts Loans. Reethi R Expert content developer for Bankruptcy Alternative. Reethi Rai's top article generates over 9900 views. Bookmark Reethi Rai to your Favourites.
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