How To Claim Bankruptcy – Beware
Bankruptcy is a situation where a person or legal entity can no longer repay or service their debt. With the recent economic downturn many people have been caught out by finding themselves in a situation where not only can they not afford to repay their debt, they cannot afford to pay the interest. This has meant that many are now looking to find out how to claim bankruptcy.
It is also possible for a creditor to file a bankruptcy order against a debtor. The debtor has no choice in the matter as proceedings will continue even if the debtor chooses to ignore or dispute the order.
When claiming bankruptcy it is now a legal requirement that consumer credit counselling is undertaken, to ensure that the individual is entering this state of affairs only as a last resort.
What are the advantages and disadvantages of bankruptcy?
Not all debt can be removed – alimony payments and taxes are two things that have to be repaid, but under chapter 7 bankruptcy laws an individual will usually come out free of debt, which is why chapter 7 is the most preferred option.
Coming out of chapter 7 has 2 main disadvantages.
The main disadvantage is that the majority of your possessions are liquidated to pay your creditors.
The other downside is that those who have had financial dealings with you in the past, if, after selling all your possessions are still out of pocket, are unlikely to want to have any financial dealings with you in future.
It doesn’t have to be this way however if you qualify for chapter 13 bankruptcy.
New laws introduced in 2005 make all bankruptcy applicants undergo a financial means test.
Should you fail the means test, (your income is deemed sufficient to be able to repay your debts over 3-5 years), and your income is found to have been above the median for a family of your size in your state over the past 6 months, you are precluded from filing chapter 7 and have to file under chapter 13.
No personal property is liquidated under chapter 13, but all debt is repaid under a 3-5 year repayment plan.
The repayment plan under chapter 13 is arrived at after a series of complex tests which can sometimes serve to inflate the true amount of an individual’s earnings, making the repayments rather high as a proportion of income. This can be quite difficult.
A chapter 7 bankruptcy stays on one’s credit record for 10 years, chapter 13, 7 years.
Should you require additional free inShould you requiremation on how to claim bankruptcy and the different chapters and how they work, go to www.howtoclaimbankruptcy.net Grab a totally unique version of this article from the Uber Article Directory
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- Chapter 7 Bankruptcy
- The Means Test For Chapter 7
- Bankruptcy – Chapter 7 Alternatives
- Some Facts Regarding Chapter 13 Bankruptcy
- Tips To Claim Bankruptcy
- Chapter Seven Bankruptcy Laws Post 2005
- Declaring Yourself Bankrupt – Is It Right For You?
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