Top 4 Reasons People File For Bankruptcy
June 22nd, 2009
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Top 4 Reasons People File For Bankruptcy
Bankruptcy can be a way out for many families who find themselves overwhelmed with too much debt It is a big decision with long-term consequences, and you should never be entered into lightly Nevertheless, it does provide relief for many people who need drastic assistance in debt relief . .Here are four common reasons people file for bankruptcy . .1 Avoiding foreclosure . .Chapter 7 bankruptcy can wipe out many consumer debts, but it doesn’t guarantee that you’ll get to keep your assets For example, if you owe credit card debt, chapter 7 can protect your home from creditors Credit cards are unsecured debt, which means that there is no collateral backing up the loan . .However, if you are behind on your mortgage payments and are facing foreclosure, you may need to file Chapter 13 bankruptcy and establish a payment plan so you can catch up on your mortgage payments This is because Chapter 7 does not eliminate your obligation to the lien holders such as the mortgage company or bank . .2 Prevent repossession of your vehicle . .Just like your house payments have to be made even if you file for bankruptcy, your car loan has to be paid off if you intend to keep the vehicle You can use Chapter 13 bankruptcy to form a repayment plan for your debts, usually over the next three to five years . .3 Medical bills . .A common reason why many families have to end up in bankruptcy court is the high cost of medical bills Catastrophic events like the need for emergency surgeries can overwhelm a family who is uninsured or underinsured . .4 Unemployment . .Many unfortunate people have lost their jobs or had their hours reduced during this economic downturn This reason doesn’t need much explanation, since it’s obvious that a reduction in income will make it more difficult to keep up with your bills What we should say is that filing Chapter 7 or Chapter 13 can help with your situation, but you should explore all options carefully before making a decision . .Sometimes simple solutions like getting a part-time job or using debt negotiation can solve your problems without resorting to legal action that can damage your credit score for years to come .
Source: www.rsstnx.com
Chapter 11 Explained
When a person or a business needs to file for bankruptcy protection, there are several chapters within the United States Bankruptcy Code under which the initial petition can be filed that will govern the subsequent proceedings While many people understand the basics for bankruptcy petitions that are more consumer-oriented and usually filed under Chapter 7 or Chapter 13, many see filings under Chapter 11 of the code as extremely complicated and difficult to understand . .While a bankruptcy filing under Chapter 11 is usually a complicated matter, there are some basics that are not difficult to understand However, this is not a filing that one should attempt to take on individually You will need professional help in order to make sure that all goes as it should, so contact a bankruptcy lawyer today to schedule an initial consultation if you are having trouble meeting your obligations . .Basic Procedure under Chapter 11 . .Generally, a Chapter 11 filing is done by businesses, and this sort of filing is known as either a ‘reorganization bankruptcy’ or a ‘rehabilitation bankruptcy ‘ The reason for these labels is that a Chapter 11 filing basically gives the petitioner time to put together a plan that helps it get out from under the debts it cannot pay at the time of the filing and to one day ‘emerge’ from bankruptcy . .Below is a brief look at the procedures involved with a Chapter 11 filing: . . 1 Initial filing - When a business files for Chapter 11 protection, the court will order that the creditors cease with collection efforts while the case is pending, much like in a consumer bankruptcy filing . 2 Disclosure statement - The filing party must also file a disclosure statement that lists all assets and liabilities as well as a plan for reorganization that details how the debts will be paid during the plan’s duration . 3 Creditors’ committee - When a filing occurs, the largest creditors are usually grouped into a committee that will vote on the reorganization plan If the plan is approved, the parties move forward under it If it’s not, either the filing party must come up with a new plan, the creditors can come up with their own plan or the filing party can petition the court to ‘cram down’ their plan if it’s reasonable on its face, and the court will rule on it . 4 Post-plan - When the court ultimately accepts a plan, the debts as constituted prior to the filing are discharged and the petitioner must make the payments proposed in the plan until the time has passed If the company does not pay under the plan, it opens up several possibilities for enforcement .
Source: www.rsstnx.com
