For a lot of people experiencing debt or financial problems, the thought of bankrupcty can be quite over-whelming.
If you're young, just hearing the word bankruptcy sounds like a horrible thing to go through or even something you've been conditioned to this is bad. Well it's not bad at all and sometimes it's quite necessary.
So, as a lawyer practicing CT bankruptcy, I feel compelled to provide information to people who are new to bankruptcy or are considering filing. This general information should help you get your head around some of the basic concepts and prepare you for your first visit with a bankruptcy specialist.
Bankruptcy is the legal status of a person who has acquired enough debt that he or she is no longer able to repay the amount owed.
A lot of people consider bankruptcy to be an event that occurs once and then is cast into the past. It's understandable to think of bankruptcy this way but the opposite is true. It's a social standing that a person maintains after filing for upwards of 7 to ten years.
The time bankruptcy lasts depends on the type that's been filed. Filing can turn out to be both beneficial and/or detrimental to a person's financial standing and credit rating, but it depends on the associated circumstances.
In the United States, bankruptcy is addressed in Title 11 of the United States Bankruptcy Code. Bankruptcy is defined in 6 ways, including Chapters 7, 9, 11, 12, 13, and 15 of this title, but the most commonly filed are Chapter 7 and Chapter 13.
Chapter 11 is slightly more commonly filed than the other remaining three, but for the average citizen or small business owner, it is usually not as beneficial. Chapter 7 bankruptcy makes provisions for the liquidation of a person's assets in order to repay the owed amounts.
Chapter 13 provides for an extended payment plan to be created for the person filing. As many as 65% of U.S. consumer bankruptcy filings are filed under Chapter 7. The process to file under any chapter can be lengthy and should be carefully approached. Before any steps are taken, it is vital to make sure that bankruptcy is the correct choice. In cases where bankruptcy isn't the most viable option, debt consolidation and settlement usually end up being the best options available.
I debt consolidation is available, it will generally be more beneficial to pursue this alternative. Going through financial counseling is advisable and is usually fairly economical.
After a person decides to declare bankruptcy, they'll have a choice of which Chapter to file under. They can choose Chapter 7 which requires no repayment of debts, or they can file under Chapter 13 which provides provisions for retaining non-exempt property and tends to be removed from a credit report faster.
When the filing process has actually begun, an automatic stay is issued by the court to protect the filer from collection activities during the bankruptcy process. This prevents creditors from repossessing property and garnishing wages, pauses foreclosures, and temporarily halts IRS collections.
All debt-related problems are deferred until the court makes a ruling as to the legitimacy of the bankruptcy filing and how the situation is to be approached. When the determinations are finalized, creditors are either repaid through asset liquidation or through an agreed repayment plan.
The total process from filing to discharge (or when the bankruptcy is finalized) usually takes three or four months but can also last up to a year.
When the debt is finalized, the filer can start thinking about their future plans. An important thing to do is verify with the credit bureau so as to ensure that the accounts in question have been recorded as closed. If this process is skipped, there is a chance they will may continue to show them as open and overdue.
It's important to note that dealing with smaller balances and consistent payments, credit can be vastly improved much earlier than the decade it may take for the bankruptcy to be entirely removed from a report.
When it comes to consolidating your debt or filing for bankruptcy, it's highly advised that you speak to a bankruptcy lawyer so you can ensure you're getting the right advise and your case will be dealt with legally.
If you're young, just hearing the word bankruptcy sounds like a horrible thing to go through or even something you've been conditioned to this is bad. Well it's not bad at all and sometimes it's quite necessary.
So, as a lawyer practicing CT bankruptcy, I feel compelled to provide information to people who are new to bankruptcy or are considering filing. This general information should help you get your head around some of the basic concepts and prepare you for your first visit with a bankruptcy specialist.
So what is bankruptcy?
Bankruptcy is the legal status of a person who has acquired enough debt that he or she is no longer able to repay the amount owed.
A lot of people consider bankruptcy to be an event that occurs once and then is cast into the past. It's understandable to think of bankruptcy this way but the opposite is true. It's a social standing that a person maintains after filing for upwards of 7 to ten years.
The time bankruptcy lasts depends on the type that's been filed. Filing can turn out to be both beneficial and/or detrimental to a person's financial standing and credit rating, but it depends on the associated circumstances.
The different bankruptcy titles
In the United States, bankruptcy is addressed in Title 11 of the United States Bankruptcy Code. Bankruptcy is defined in 6 ways, including Chapters 7, 9, 11, 12, 13, and 15 of this title, but the most commonly filed are Chapter 7 and Chapter 13.
Chapter 11 is slightly more commonly filed than the other remaining three, but for the average citizen or small business owner, it is usually not as beneficial. Chapter 7 bankruptcy makes provisions for the liquidation of a person's assets in order to repay the owed amounts.
Chapter 13 provides for an extended payment plan to be created for the person filing. As many as 65% of U.S. consumer bankruptcy filings are filed under Chapter 7. The process to file under any chapter can be lengthy and should be carefully approached. Before any steps are taken, it is vital to make sure that bankruptcy is the correct choice. In cases where bankruptcy isn't the most viable option, debt consolidation and settlement usually end up being the best options available.
I debt consolidation is available, it will generally be more beneficial to pursue this alternative. Going through financial counseling is advisable and is usually fairly economical.
After declaring bankruptcy
After a person decides to declare bankruptcy, they'll have a choice of which Chapter to file under. They can choose Chapter 7 which requires no repayment of debts, or they can file under Chapter 13 which provides provisions for retaining non-exempt property and tends to be removed from a credit report faster.
When the filing process has actually begun, an automatic stay is issued by the court to protect the filer from collection activities during the bankruptcy process. This prevents creditors from repossessing property and garnishing wages, pauses foreclosures, and temporarily halts IRS collections.
All debt-related problems are deferred until the court makes a ruling as to the legitimacy of the bankruptcy filing and how the situation is to be approached. When the determinations are finalized, creditors are either repaid through asset liquidation or through an agreed repayment plan.
The total process from filing to discharge (or when the bankruptcy is finalized) usually takes three or four months but can also last up to a year.
Finalizing bankruptcy
When the debt is finalized, the filer can start thinking about their future plans. An important thing to do is verify with the credit bureau so as to ensure that the accounts in question have been recorded as closed. If this process is skipped, there is a chance they will may continue to show them as open and overdue.
It's important to note that dealing with smaller balances and consistent payments, credit can be vastly improved much earlier than the decade it may take for the bankruptcy to be entirely removed from a report.
When it comes to consolidating your debt or filing for bankruptcy, it's highly advised that you speak to a bankruptcy lawyer so you can ensure you're getting the right advise and your case will be dealt with legally.
Source...