Bancruptcy is a common misspelling for the word 'bankruptcy'. Regardless of how you spell it, the thought of facing bankruptcy generally conjures up fear, anxiety, stress and shame. It's important to realize millions of Americans are currently in the same financial boat. With endless economic upheaval and skyrocketing unemployment rates, the entire country is on the verge of bancruptcy.
The good news is bancruptcy provides the opportunity to reduce or eliminate outstanding debts and start afresh with a clean financial slate. The bad news is new bankruptcy laws were implemented in 2005; making it considerably more difficult to obtain full discharge of debts.
Most people require the services of a bankruptcy attorney to assist them through the process. The Bankruptcy Abuse Prevention and Consumer Protection Act include strict compliance measures. One stipulation requires debtors to repay a portion of their debts whenever possible.
In the past, most people filed Chapter 7, or "liquidation" bancruptcy. Chapter 7 allows debtors to liquidate assets to repay creditors. The remaining balance is written-off and debts are legally discharged. Today, most people are forced to file Chapter 13 and repay their debts through a strict repayment plan.
Chapter 13 payments are generally paid over a period of three to five years. In some instances, payments are automatically deducted from your paycheck. Otherwise, payments are made directly to the Trustee, who then distributes payments to creditors.
Today, many people are turning to bancruptcy as an option to stop foreclosure. This is a consideration which should be weighed carefully. Although filing a bankruptcy petition can temporarily cease foreclosure proceedings, if a repayment plan cannot be established you could end up losing your home any way.
Since Chapter 13 repayment plans require debtors to contribute a large percentage of their income to repay debts, many people fail out of bankruptcy within a matter of months. Unless extenuating circumstances are responsible, bankruptcy Trustees rarely have much sympathy for debtors who cannot adhere to their repayment plan.
If debtors fail out of bankruptcy, creditors can petition the court and seek dismissal. The judge will review the case and either allow the debtor to file for Chapter 7 or dismiss the bancruptcy. When bankruptcies are dismissed, debtors lose all protection from the court and creditors can proceed with collection actions.
Before making a final decision to file bankruptcy, take time to investigate your options. Bankruptcy alternatives include debt consolidation, debt management, credit counseling and budgeting.
If you are facing bankruptcy and need to sell real estate, promissory notes, business notes or probate inheritance, contact Simon Volkov today to discover what options are available to you.
Published on January 13, 2009 at 01:14 PM
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