Feeling The Financial Squeeze? How To Claim Bankruptcy
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One should always first consider alternatives to bankruptcy.
Within 180 days of filing for bankruptcy, the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act makes it law that an individual must get some form of credit counselling.
By having counselling, an individual is made aware of the alternatives to bankruptcy, which may be suitable in their case.
The most common bankruptcy types are what are referred to as chapter 7 and chapter 13 bankruptcy.
Chapter 7 is often regarded as being the best option. The downside is that most all personal assets have to be sold, including any familly home.
Should any debt still exist after selling all relevant possessions, this is cancelled, allowing a completely clean slate - however, some debt, such as tax, cannot be written off.
Chapter 13 does not require the liquidation of all personal assets. It works differently in that a repayment plan is put in place to repay all creditors over a 3 to 5 year period.
Some individuals file for chapter 7, despite having sufficient income to enter into a chapter 13 repayment plan. To ensure that repayment is made when ever possible, the legislation introduced in 2005 requires all applicants for chapter 7 to complete a means test
It is very important to hire a lawyer. They will decide which form of bankruptcy is most suitable for you, and help fill in the BAPCPA's means test.
"Automatic Stay" is automatically introduced, meaning that any creditors have to deal with your lawyer and may no longer approach you directly for payment of any monies owed to them, once a lawyer is appointed.
You will be required to draw up a list of debtors and a list of your assets. These will be reviewed at the meeting of creditors (what's called a"341 Meeting"). where you have to answer a series of questions on oath.
The court decides, in a chapter 7 filing, the assets to be sold and the proceeds distributed amongst your creditors, any remaining debt is then written off and you are no longer liable, resulting in a clean financial slate.
The situation is different in a chapter 13 filing, in that a 3-5 year repayment plan is introduced to pay off all your creditors, based on the result of your means test.
Under chapter 13, the notice of discharge is served 30-60 days after the repayment plan has been completed and fulfilled. Under chapter 7, creditors can legally challenge the discharge on the 60th day after the meeting of Creditors. If no representations are made, notice of discharge is issued a few days later.
Article Source: Articlelogy.com
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