Bankruptcy Information--an Overview

By: Jared Myers

Reliable bankruptcy information is challenging to find.

Bankruptcy is one of the most challenging, ofttimes even traumatic, decision that can be faced in life. Often due to unpredictable medical expenses, changes in employment or other unforeseen factors, bankruptcy is a last-ditch choice for individuals who face insurmountable debt, foreclosure and other severe 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 ever changing, along with the stock market, many individuals can't say they live in complete security any more.

How it Works

Debtors file for different types of bankruptcy for different reasons. A debtor who files for Chapter 7 bankruptcy is generally trying to discharge all of his/her debts. A typical Chapter 7 case runs approximately four to six months, from the petition date to the discharge date.

Chapter 7 bankruptcy is often the more appropriate choice for those whose debts, such as credit card debt and medical bills, are mostly unsecured. So, if you don't own many assets, your your earning are below the median, and the lion's share of your debts are not secured, Chapter 7 bankruptcy might be your best choice.

Typicaly, a debtor who files Chapter 13 is employed and is trying to retain his assets while creating a payment plan with the bankruptcy court in order to pay off his creditors. The individual will devise a Chapter 13 plan, where he agrees to make monthly payments to the Court for a term of three to five years. This should provide the debtor sufficient time to pay back the predetermined debts.

Chapter 11 bankruptcy filings are sometimes considered "strategic". To put this another way, management may wish to reorganize their finances for political purposes, not solely for the sake of balancing books. Chapter 11 is reorganization, not liquidation. Debtors can "emerge" from a chapter 11 bankruptcy within a few months or within a few years, depending on the amounts owed and elaborateness of the bankruptcy.

Plans

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

If your plans are accepted, creditors are assigned priority by the court. Once your assets are distributed, you will be free from most of your liabilities, even if your debts are not fully paid off. Creditors are paid according to the amount they accept. The smaller the settlement, the quicker they will be paid.

Conclusion

Bankruptcy can be a real stress relief if you are in a desperate situation, but it is necessary to realize what has brought you to that point. If you declare bankruptcy and then go on without changing your spending habits, you are fated to wind up in a similar situation again.

Declaring bankruptcy is not an easy decision, but we can help you sort out your options, review potential alternatives, and then make a decision about where you might go from here.

It is a legal chance to get a new start.

For more and options, visit our website.

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