Understanding Bankruptcy Is Still a Problem For Most People Who Face It - Image via Wikipedia
Individuals are sometimes unable to honor their financial obligations like debts due to varied reasons. The legal process by which individuals get a new chance to build their financial status is referred to as bankruptcy. This is a mechanism where their debts are cancelled by either the sell of all their assets or parts of their debts are eliminated under a new stretched out monthly payment structure under the supervision of a legal officer.
There are two types of bankruptcy that can be applied for which are chapter 7 and chapter 13. Chapter 7 is commonly used when you have little property except for the basic assets like furniture and clothing, have little money or no money left after meeting basic expenses and when you cannot afford to meet them. The processing of chapter 7 moves quickly and most unsecured debts can be completely eliminated.
The eligibility criteria for filing chapter 7 is however selective. If you are deemed to be financially capable of filing chapter 13, you will not be allowed to file it. It is always an option for people who show proof of difficulties of sustaining themselves or their families. You cannot file for this type if you obtained the same protection for the last eight years or you were on a chapter 13 scheme for the last six years.
Debt reorganization plan is also popularly known as chapter 13. An individual who files for this plan must show proof that he has a reliable source of income that can enable him sail through the plan. The debtor is given a three to five years period to completely pay his debt under the protection of a court. He has to present a structure indicating how he is planning to settle the debts and this must include the period and the amounts.
The minimum amount of money that you will be required to pay monthly under chapter 13 is calculated depending on; the monthly income you earn, the total amount of the debt and how much the creditors would have earned if you had opted for chapter 7. The debt limits set by the federal government for eligibility in this structure must be adhered to.
An individual can be declared bankrupt either voluntarily or involuntarily. Voluntary declaration involves an individual initiating the proceedings after realizing that he is not able to honor his debts. The debtor can also be forced into submitting after a creditor with a strong base files for the same. Once the application has been accepted, you have no otherwise but to co-operate fully with the court and the parties involved.
The implications of being declared bankrupt might be very heartbreaking such as tainting your public image since your name and financial status will be published. You might be denied credit and all your property or some of them may be lost.
Liquidation should always be chosen as the last option after unsuccessfully trying other options like selling your assets. Before choosing which type to apply for, it will be prudent to discuss the matter with a liquidation attorney for advice.
A debt consultant can help you resolve your bankruptcy Burlington problems. Financial questions and concerns can be addressed by our bankruptcy Niagara falls experts in a friendly and professional manner.
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