Bankruptcy-Resource.com

Chapter 13 Bankruptcy Rules: Some Basic Information

Bankruptcy-Resource.com — Thu, 08 Jul 2010 08:42:08 +0000

You are now fully aware that you are nearing bankruptcy, what will you do? Know your options by reading about chapter 13 bankruptcy rules.

If you are an individual with a regular source of income, you can develop a plan to repay your debts in a three to five year period by paying monthly or bi-weekly through the Chapter 13 Bankruptcy which also known as reorganization bankruptcy.

But before you can file for bankruptcy, you must receive credit counseling from an agency approved by your country’s Trustee’s office. These agencies are allowed to charge a fee for their amenities, but they must provide reduced or even free counseling if you cannot afford to pay.

Another qualification for this type of bankruptcy declaration is that, the repayment scheme you are proposing should show that you have a salary income with “disposable income.” Disposable income is the change from your basic necessity requirements such as food and utilities. This will go to pay your unsecured debts like credit card and hospital expenses.

What are the advantages of filing chapter 13 bankruptcy? First and foremost, chapter 13 bankruptcy is found to be a more sound choice of people who are desperately looking for relief from their financial problems but at the same time, not prepared to lose all their properties. Since the debtor is given a chance to re-organize his finances, he has time to come up with a viable payment plan. Good for the debtor since he can propose something he knows he can deliver.

Having said that properties are not completely lost in this bankruptcy type, the debtor gets to keep most priced assets he owns. The inherited house of the family will not be sold off to pay for his debts, like in the case of a chapter 7 bankruptcy. This is an important advantage of chapter 13. One can keep valuable properties with the chance of not losing anything at all.

Remember not to plunge on filing bankruptcy without making sure the rules it covers are fully understood. Many times, debtors fall trap to emotional stress and they just want to get things over with by liquidating their assets not knowing that there’s chapter 13 – a better and more practical option to take.

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Chapter 7 Bankruptcy Information – The Basics

Bankruptcy-Resource.com — Thu, 01 Jul 2010 06:04:31 +0000

The nature of chapter 7 bankruptcy is very simple. But first, we must know that bankruptcy laws help people who can no longer pay their creditors get a fresh start – by liquidating assets to pay their debts or by creating a repayment plan. Bankruptcy laws also protect troubled businesses and provide for orderly distributions to business creditors through reorganization or liquidation.

Most cases are filed under the three main chapters of the Bankruptcy Code – Chapter 7, Chapter 11, and Chapter 13. Federal courts have exclusive jurisdiction over bankruptcy cases. This means that a bankruptcy case cannot be filed in a state court.

What is Chapter 7?

A chapter 7 bankruptcy case does not involve the filing of a plan of repayment as in chapter 13 (also called a wage earner’s plan). Instead, the bankruptcy trustee gathers and sells the debtor’s non-exempt assets and uses the proceeds of such assets to pay holders of claims (or the creditors) in accordance with the provisions of the Bankruptcy Code.

In order to start the case, the debtor should file an official petition with bankruptcy court in the area where the person lives or where the business debtor is located. There are forms that will be required to be filled up with a list of all the assets and liabilities that the debtor has together with his brief financial background.

As soon as he files for bankruptcy, creditors are prevented from trying to collect from debts through the power of an “automatic stay.” The stay preserves his property and prevents him from sued.

Aside from the petition, the debtor must also file the following:
1. schedules of assets and liabilities;
2. schedule of current income and expenditures;
3. statement of financial affairs; and
4. schedule of executory contracts and unexpired leases

The schedules must also include a list of the debtor’s property which means any asset or possession not just real state.

The courts charge an approximate of $245 filing fee, $39 miscellaneous administrative fee, and a $15 trustee surcharge. It should normally be paid after the petition has been filed.

It is advisable to seek a reputable bankruptcy attorney to get further chapter 7 bankruptcy information.

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Traditional Debt Settlement vs. Debt Resolution

Bankruptcy-Resource.com — Wed, 30 Jun 2010 00:05:39 +0000

When your credit is seemingly insurmountable, debt settlement and debt relief are two choices you can avail before considering to file for bankruptcy. These options may sound the same but they employ different techniques which have different results.

Basically, a debt resolution is a service of a lawyer. Whereas, a debt settlement involves a third party credit settlement firm who will negotiate for a reduction of your outstanding debt.

Now, what are the key features of the two?

Debt Settlement

Debt settlement does not start until the client or debtor reaches an accumulated amount on trust funds, and fees for the debt settlement company are paid.
You do not have legal representation from a debt settlement firm. If you get sued, you have to face it yourself, or seek the representation of an attorney at your own cost.
In a debt settlement, only the principal is negotiated. This does not stop the interest from accruing.
Representatives of debt settlement firms specialize in negotiations.
Some of these companies may have attorneys to deal with client’s rights violations by the creditor or their representatives. However, this is not the focus of their service. Most often debtors are left to deal with violations by themselves or seek assistance of an attorney of their choice.

Debt Resolution

Law firms will work with the debtor or their client immediately upon enrollment on their debt resolution program. This involves some applicable fees.
The law firm will represent their client in instances the debtor gets sued or receives summon for court appearance.
The law firm will deal with the debt in whole (principal and interests) as much as it can. If they are unsuccessful, they opt for a settlement as a last resort.
Those who work on debt resolution are well-versed in consumer law and consumer rights, including a profound knowledge of contract laws.
Client rights are protected. In the event that they see a violation of their client’s rights, they take legal actions against the violator on behalf of the debtor. Except for special cases, the creditor nor the collecting agency, cannot directly call the debtor. These calls are to be made with the representing law firm.

In both options, whether you are to choose debt settlement or debt resolution, expect your credit score to be negatively affected. Debt resolution seems to have a slight advantage on credit effect. This is because most debtors who avail of debt resolution already carry a negative credit score, and law firms negotiate that your debt would appear as “Paid as Agreed” or “Settled” while you are enrolled in the resolution program.