Filing for bankruptcy involves the same 破產 process in most states. The laws that govern insolvency are more or less the same all over the United States with a few exceptions here and there. This allows for the diversities in circumstances leading to insolvency. If you live in any one of these states, and you find yourself going insolvent, there are basic facts that you need to familiarize yourself with.
With this knowledge at hand, you will be better placed to file a petition in court, asking to be relieved from your debts for a while. This is known as voluntary bankruptcy. It is when you acknowledge that you have run out of resources and you take the first step to notify your creditors through a court petition.
You also need to know that there is involuntary solvency. In this case your creditors file a petition in court, suing you for not being able to pay them for some considerable amount of time. If this happens, you could file a petition against that of the creditors. This will stop the court case from proceeding. However, you need to have convincing reasons as to why you are doing so. You also need to be able to demonstrate how you intend to settle the bills.
Bankruptcy proceedings could also have some special exemptions. They fall under two categories, namely federal insolvency exemptions and federal non-insolvency exemption laws. It is a requirement by the law Mass that you chose between the two when filing for insolvency. The latter category of exemption implies that your personal property like your homestead and other financial benefits can be exempted from insolvency. Learn more about these laws from your local library.
Bankruptcy is used by both individuals and business to get rid if their debts. They can then repay these debts with protection from the bankruptcy court. There are two kinds of bankruptcy: reorganization and liquidation. Under Chapter 7 of the bankruptcy code, liquidation bankruptcy happens when you ask the bankruptcy court to have your debts discharged. The bankruptcy court will then be sell or liquidate some of your properties. The money gained from doing this is then shared amongst the creditors. Liquidation bankruptcy lasts for between 4 and 6 months, so it is quite quick, and you only need to appear once at the courthouse. It is a very easy process, and means you don’t have to pay over a long period of time. However, Chapter 7 bankruptcy is not available to everybody.
If you have been discharged from bankruptcy in the last 6 to 8 years, then you will not be able to benefit from Chapter 7 bankruptcy. Also, if after looking at your overall debt, expenses and income, it seems that the other kind of bankruptcy is more suitable, then you cannot demand that liquidation bankruptcy is used.
If you are a veteran, who is now disabled, and you incurred your debt while you were in active duty, then it is almost automatic to be able to file. Also, if your debts were caused by running a business, then you will also qualify. If you don’t fall into any of the above categories, then you must meet certain criteria. These criteria have been brought in because of new rules on bankruptcy. Your monthly income will be compared to that of an average family of the same size as yours in the state in which you live. This is not your income when you file for bankruptcy. It is the average income for the 6 months previous to your filing date. The calculation does not include Social Security benefits such as retirement and disability.
If it seems that your income would allow you to support reorganization bankruptcy, then you will not be allowed to apply for liquidation bankruptcy. Most people would prefer this kind of bankruptcy, because a fraction of your debt need not be repaid. Some courts will allow you to keep some of your properties so that you don’t have to start from scratch after your bankruptcy. Reorganization bankruptcy usually happens under Chapter 13, where you file a plan on your intentions to settle your debts to the court. In your plan, you say how much money each of your creditors will receive. You will be discharged of your debts after either a 3 or 5 year repayment plan, assuming you have repaid everything asked of you. Sometimes, if the court sees that you are in obvious financial trouble, then they will discharge you earlier than planned. Both kinds of bankruptcy demand that you complete a credit counselling course, which should be run by an organization which is approved and recognized by the United States Trustee’s office.
This course will help you to examine your situation and see if bankruptcy is really necessary. It will enable you to examine other possible informal repayment schemes which you may not have thought of. Even if such a repayment isn’t possible in your case, you will still need to have counselling. Also, you will need to complete counselling after the bankruptcy proceedings. This post-counselling aims to teach you the right way to manage your finances so you don’t get into a similar situation in the future. You will not be discharged from your bankruptcy unless you complete this counselling. It may be that bankruptcy is beneficial for the creditor and the debtor. It is a method of taking charge of your financial responsibilities and to be able to deal with the mistakes which led to your difficulties. Although bankruptcy can be to your advantage, you should only consider it as a last resort.