Filing Personal Bankruptcy Help

A state of bankruptcy exists when a business or individual can no longer afford to pay their debts and or employees.

Businesses and individuals are entitled to file for bankruptcy under chapter 7, which has the attraction of removing debt from the debtor at discharge.

Chapter 7 is the most popular, despite the fact that the debtor has virtually all his or her worldly goods sold. However, this is often an attractive option if one is financially paralyzed by debt.

A compulsory means test was brought in in 2005 to check the true position of a debtor’s finances. Failure of this test will prevent a debtor filing under chapter 7 and a chapter 13, or repayment plan, will be enforced.

The means test was introduced to ensure that any debtor applying for chapter 7 genuinely cannot afford to repay their unsecured debt. If it is found that their income is such that they can make repayment, albeit with a rearranged repayment schedule, they will not be allowed to file chapter 7, but chapter 13 instead.

With that in mind, there are other alternatives to be considered.

First off, think about whether or not you really do need to claim bankruptcy at all? It can look like a simple option, and look very appealing when one is struggling to make ends meet, but the consequences are serious.

Creditors may fear that if one of their customers files for bankruptcy that they will get little or nothing and have to write off the debtor’s debts. The debtor should always seek a repayment holiday first, which may have some appeal to the creditors as delayed payment is better than no payment at all.

If you fail the chapter 7 means test, you will automatically be put into chapter 13, which simply rearranges your repayment schedules so all debt is repaid over 3-5 years. However, you could also consider chapter 11 as an alternative.

Chapter 11 is very similar to chapter 13 and is suitable for business. No assets are sold so the business can carry on, making payment to creditors under a repayment plan, and after the bankruptcy is discharged, can hopefully prosper, having caught up with its debts.

It might be that because of these difficult economic times you might be considering declaring yourself bankrupt. If you would like further free information about declaring yourself bankrupt, visit www.declaringyourselfbankrupt.net.

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4. Some Facts Regarding Chapter 13 Bankruptcy
5. A Riverside Bankruptcy Attorney Is Your Most Important Avenue To Get Help For Filing Chapter 13
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8. Comprehending Main Issues About Chapter 13 Bankruptcy
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