Filing Personal Bankruptcy Help

Many commentators now think that the world economic downturn is past its worst point, although busineses are still uncertain as to what the future may hold. Whilst many people have lost their jobs during these difficult times, there is still a lag as the economy improves, so there is little doubt that the number of people claiming bankruptcy will increase.

Bankruptcy is open to both companies and businesses, and the two most common forms of bankruptcy are chapter 7 and chapter 13. Chapter 13 is often preferred by business, as it allows the company to carry on trading, if it is found that it is likely to have a long term future, despite its short term financial difficulties. A chapter 7 banktuptcy on the other hand, means that all assets are liquidated, preventing any form of continued trading.

By filing under chapter 13, one’s credit rating, although severely damaged, is not as badly damaged as under a chapter 7 filing, and no personal or business assets are lost.

Because no assets are sold, a business can continue to trade, whilst looking to longer term success.

Unlike a chapter 7 bankruptcy, chapter 13 is basically a repayment plan, worked out by the court and with the agreement of the creditors, which aims to repay outstanding debts by rescheduling them over a 3-5 year period. Conditions can seem a little harsh, but the business stays afloat and looks forward to better times after the repayment period has been completed.

Once a chapter 13 bankruptcy has been agreed and implemented, the individual or business is then protected from their creditors, who may not then chase for payment.

Anyone who applies for a chapter 7 bankruptcy has to undergo a means test. This is to make certain that they do not have sufficient income to repay their debts in full over time. If they do, then they are forced into a chapter 13 bankruptcy, in order to repay their debt over time.

Although it all sounds very easy, bankruptcy should be avoided at all costs, as it brings it’s own set of fiancial difficulties later.

Before declaring yourself bankrupt, it’s vital that you ask a professional adviser about your financial position. This is because declaring yourself bankrupt has severe implications for you credit rating and general financial position in later life.

Related posts:

1. Chapter 7 Bankruptcy
2. Chapter 13 Bankruptcy – Reasons To File
3. A Look At Chapter Seven Exemptions
4. Should I Consider Chapter 13 Or Chapter 7 Bankruptcy?
5. Bankruptcy – Chapter 7 Alternatives
6. The Means Test For Chapter 7
7. How To Claim Bankruptcy Post 2005
8. Understanding Chapter 13 Bankruptcy
9. Chapter Seven Bankruptcy Laws Post 2005
10. How To Claim Bankruptcy – Beware