A Bankruptcy Lawyer’s Blog

There are multiple types or chapters of bankruptcy. Chapter 13 bankruptcy is frequently also known as reorganizational bankruptcy and also as a wage earner's plan. It can be used by individuals as well as unincorporated businesses. This allows the filer to structure a repayment plan for their financial obligations which is supervised and approved by the bankruptcy court. Under this plan, you are given a period of time, typically three to five years, to get your debt repaid. After you have filed, your existing creditors cannot call or harass you, and are not permitted to start collections proceedings against you.

This type of bankruptcy may be better suited for some people, although each case is different. For example, with Chapter 7 bankruptcy, the consumer's debt is almost completely eliminated. While this sounds like good news, the caveat is that your assets will be sold in order to repay the debt. By contrast with Chapter 13, while your debt remains, it is reorganized so that you can comfortably make payments and you are allowed to retain your assets.

While many people may view this as a debt consolidation loan, it really is not a loan in any sense of the word. The debt remains, only a restructured repayment plan is defined and the money is distributed to the creditors via a trustee appointed by the courts. Although the consumer no longer has a contract with the creditors, the fact that the debt still exists cannot be overlooked. Certain types of debts are given a priority and must be paid in full.

If you have a lot of assets like a house that you do not want to go through foreclosure on, this type of bankruptcy can protect that. If foreclosure proceeding are already in place, the bankruptcy will stop those from progressing further. You may have delinquent mortgage payments which need to be brought up to date, but they may lose their delinquent status. You must also keep up with future mortgage payments.

The basis for this type of reorganization is that your debt is restructured and rescheduled to make it easier for you to comfortably make your payments. This is done through a variety of methods, including lowering the interest rate or extending the term of the loan to result in lower payments. The goal here is to allow you to make the payments, but with lower payments so that you can make them on time.

There are certain limitations with Chapter 13 bankruptcy in terms of the amount of debt that can be restructured. Your total of unsecured debt must be less than approximately $307,000 and the sum total of your secured financial obligations must be less than approximately $923,000. These figures are adjusted occasionally to be in sync with the consumer price index.

Before you are eligible to file bankruptcy, you must first go through credit counseling. The credit counseling must be through an agency that is approved by the United States Trustee's office. Although the companies may charge a fee for their services, if you are unable to pay their fee, they must reduce the cost and make adjustments for your individual situation.

The bottom line is that this allows individuals some financial breathing room to repay their debts and does not require liquidation of their assets. A viable repayment plan is worked out so that debts can be repaid. This works for consumers who can still make payments but have found themselves with too much debt to handle at a particular time in their lives.

For more insights and further information about Chapter 13 Bankruptcy as well as getting a free bankruptcy evaluation from a bankruptcy lawyer local to you, please visit our web site at http://www.bankruptcy-data.com

Having a Bankruptcy on your credit report can be an awful thing to overcome. When you need to apply for credit this is the first thing that will jump out at the lender. It is said that is can be almost impossible to remove a bankruptcy from your credit report. The truth is is is hard to do this but you can remove negative items from your credit report which will in turn improve your credit score.

Information that is found on your credit report must be verified so that you do not have any marks on your report that are not yours, this will cause you to have a hard time getting any new credit. It is the credit reporting agencies responsibility to verify that the information is correct, if they can not verify it they are required to remove it by law. Be aware that these agencies do not investigate public records and if it is up to the courts they only verify in person. It is important for you to know what your rights are and be able to act on them so that you will be on the winning side of this issue.

It is always a good idea to monitor your credit report all the time to make sure it is correct and accurate. If you see negative items on your report you need to dispute them and do any follows ups to make sure they have been removed. This is your personal financial information and it is up to you to be on top of it and do not let the credit reporting agencies have negative or false information reported on you.

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For instance, if any company fails to repay the loans it has borrowed from a bank, it becomes a non-performing asset for the bank or the lender. Eventually, the non-performing asset for the bank could even become a liability. Much before the non-performing asset of the bank becomes a liability; it is disposed off through various measures to recover the loan. Such a company is declared bankrupt. If a particular company is on the verge of collapse due to mounting loans, it can file for bankruptcy.

Such companies will be referred to the authorities concerned for unbundling and disposing off its assets. It is carried out in a systematic way to ensure that the lenders are paid all their dues. All the pending dues will be cleared by the liquidator appointed by the government. The company promoters of the blacklisted firm will not be eligible for any kind of financial assistance in future. Therefore, many companies, which are on the verge of collapse, try the maximum to bail themselves out of the crisis. Bankruptcy could mean the end of the road for any company. There will no dealing with such companies by another company or bank since they have been in the red for quite a long time.

Bankruptcy could also mean that the companies will not be able to compete for any work in the public domain or the private set up. The process of liquidating the company is lengthy and time consuming. Once the company becomes bankrupt, the liquidator will invite bids from various interested parties to dispose off the assets of the bankrupt firm. The assets put up on sale are mostly the fixed assets of the company such as land, building, machinery, vehicles and inventory of products. The highest bidder will be asked to conduct the inspection of the assets as in where in condition. This is another time consuming process. It could take anywhere between six months and one year for a liquidator to dispose the assets of the company. If the assets are attached as collateral to any bank from which the loan has been raised, such assets cannot be auctioned or sold. The bank will be entitled to take control of the collateral and dispose them at an appropriate price to recover the loan. The fixed assets may fetch the appropriate price or even less than the loan given to the bank. In most instances, the lender will be in a position to recover the entire loan sanctioned to the borrower.

The promoters of a firm that has gone bankrupt too will be in a difficult position. No finance institution or bank will be willing to lend them any kind of financial assistance in future if they want to start a new business. Therefore, every company should take appropriate steps to ensure that it does not go bankrupt. Auditors of the company play a key role in ensuring that the financial health of the firm is good.

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