How To Claim Bankruptcy – What You Should Know
These days many people are becoming interested in finding out how to claim bankruptcy, which is a situation that arises when individuals can no longer service or repay their debts.
It is also possible for a creditor to file a bankruptcy order against a debtor. The debtor has no choice in the matter as proceedings will continue even if the debtor chooses to ignore or dispute the order.
When claiming bankruptcy it is now a legal requirement that consumer credit counselling is undertaken, to ensure that the individual is entering this state of affairs only as a last resort.
So what should one be aware of in filing for bankruptcy?
The most popular chapter to file bankruptcy under is chapter 7, where an individual has all debt taken away. Not all debt can be written off however, and if the main contributor to the bankruptcy is debt that has to be repaid, a chapter 13 bankruptcy is the more appropriate chapter.
There are a couple of disadvantages with this however.
The main disadvantage is that the majority of your possessions are liquidated to pay your creditors.
The second is that although any remaining debt is cancelled, those who you have not repaid in full will likely as not, be very reluctant to engage in any financial activity with you in the future.
This may not necessarily be the case though, as the above refers to the chapter 7 bankruptcy laws.
Since the introduction in 2005 of the Bankruptcy Abuse Prevention and Consumer Protection Act, all bankruptcy applicants are subject to a financial means test.
Should you fail the means test, (your income is deemed sufficient to be able to repay your debts over 3-5 years), and your income is found to have been above the median for a family of your size in your state over the past 6 months, you are precluded from filing chapter 7 and have to file under chapter 13.
The advantages of the chapter 13 bankruptcy rules are that you do not have to sell any of your personal assets, and that your creditors are paid in full by way of a repayment plan, over 3 – 5 years.
The repayment plan under chapter 13 is arrived at after a series of complex tests which can sometimes serve to inflate the true amount of an individual’s earnings, making the repayments rather high as a proportion of income. This can be quite difficult.
A chapter 7 bankruptcy stays on one’s credit record for 10 years, chapter 13, 7 years.
Should you require more free inShould you requiremation on how to claim bankruptcy and the different chapters and how they work, go to www.howtoclaimbankruptcy.net
Acceptions:
How to File for Chapter 7 BankruptcyFind debt relief by filing bankruptcy with this all-in-one-book! If you have more debt than you can possibly pay off, the bankruptcy system is there to help -- and with How to File for Chapter 7 Bankruptcy, you'll find the clear and user-friendly information, advice and forms you need to get through the entire process.
First, the book will help you determine whether you qualify for Chapter 7 -- and whether it is the best way to deal with your debts. Then you'll find out how to:
The 16th edition is revised to include the most recent forms and figures, changes to state exemption laws (which determine what property bankruptcy filers may keep), and the latest court decisions. Please note: This book does not cover business bankruptcies, farm reorganizations or individual repayment plans (Chapter 13). For Chapter 13 bankruptcy, see Nolo's Chapter 13 Bankruptcy. (20080215)
