Bankruptcy Information--an Overview

Good bankruptcy information is challenging to find.

Bankruptcy is one of the hardest, sometimes even traumatic, situation that can be faced in life. Often due to unpredictable changes in employment, medical expenses or other unforeseen factors, bankruptcy is a last-ditch option for persons who face insurmountable debt, foreclosure and other severe financial challenges.

Bankruptcy is an miserable challenge that can happen to anybody - from the fledgling entrepreneur to the most experienced businessman. Since the economy is ever changing, along with the stock market, many persons can't say they live in complete safety any more.

How it Works

Debtors file for different types of bankruptcy for different reasons. A debtor that files for Chapter 7 bankruptcy is usually looking to discharge all of his/her debts. The average Chapter 7 case lasts approximately four to six months, from petition date to discharge date.

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

Generally, a debtor who files Chapter 13 is employed and is looking to hold on to his assets while creating a payment agreement with the bankruptcy court to help pay off his creditors. The person will create a Chapter 13 plan, where he consents to make regular payments to the Court for a span of three to five years. This should provide the debtor enough time to pay back the agreed upon debts.

Chapter 11 bankruptcy filings are sometimes looked upon as "strategic". To put this another way, management may wish to reorganize their finances for political purposes, not merely for the sake of balancing books. Chapter 11 is reorganization, not liquidation. Debtors may "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 cases of bankruptcy, plans are layed out, creditors vote, and the court makes many reviews until a verdict is agreed upon. If the plan can't be be agreed upon, the court may do one of two things: liquidate the business under Chapter 7 or dismiss the case.

When your plans are accepted, creditors are assigned priority by a court. As soon as your assets are redistributed, you will be free from most of your obligations, even if your debts are not fully paid off. Creditors are repaid according to the amount they agree upon. 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 important to understand how you arrived at this point. If you declare bankruptcy and then go on your way without modifying your spending habits, you are destined to end up in a similar situation again.

Declaring bankruptcy is not a decision to be taken lightly, but we can help you sort out your options, review potential options, and then make a decision on how to proceed.

It is a legal chance to get a new start.

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