If your business is facing debts and potential bankruptcy then there are legitimate ways to look at getting out of those debts.
Many people just don't understand that these methods exist and see their businesses die. The way it works is that a debt relief company will advise you on whether you are in a position to start a debt relief program. As a general rule a business will need to be able to afford to pay 2% of what they owe each month.
The debt relief company and the business owners / managers can then come up with a plan based on the business critical debts and what can realistically be afforded on a monthly basis. The plan may include a proposal for an overall reduction in debt, to a reduction in interest, or a spacing out of the payments, or all of these things.
From here the debt relief company, using it's skills and experience of the industry, will present this plan to the company's creditors. For more information visit our friends here
Generally a negotiation will follow. Ultimately creditors will negotiate, because if a company goes out of business they will get nothing, or a very small sum.
We have some companies achieve a reduction of up to 80% or more. The debt management company charges a fee for this, but a reputable debt management company will always charge this fee as a percentage of what can be saved.
Companies can attempt to do this on their own. In fact the best debt management companies can give advice on how to go about this. However, if a company is at a business critical stage then it is much more wise to let professionals handle this process, as ultimately it's about saving a business. Visit our friends here!
Friday, August 28, 2009
Credit Card Bankruptcy Has Become All Too Common
The economy has been taking its toll on too many people in this country and it does not seem to be getting any easier in the near future. Companies are filing bankruptcy left and right and of course individuals are filing at an alarming rate. Credit card bankruptcy is a major issue in this country right now. Credit card companies are hiking interest rates to any who pay one day late and some are getting a rate increase just because.
It is ridiculous if you think about it but hey they are suffering so they want everyone else to suffer too at least that's my take on it. I had a fixed 7.9 interest rate credit card for 3 years solid no issues. I paid one day past my due date and it jacked the interest rate up to 16.9, that's over double the rate I was at. I was fuming and to top it all off they raised me again the next month and I paid on the due date. They are not relaxing on the interest rates and the best you can do is make sure you pay early so they have no reason to reason to raise your rates.
One of the companies forcing people to file credit card bankruptcy is Juniper or Barclay's bank. They are instrumental in raising interest rates without telling you or giving a logical reason. All of us are in tough times right now and many are losing their jobs almost daily. There simply no answer if you cannot find another job in a decent amount of time. If a credit card company raises your rate so high that your minimum payment goes from 70 dollars a month to 240 dollars a month its just not acceptable.
It is ridiculous if you think about it but hey they are suffering so they want everyone else to suffer too at least that's my take on it. I had a fixed 7.9 interest rate credit card for 3 years solid no issues. I paid one day past my due date and it jacked the interest rate up to 16.9, that's over double the rate I was at. I was fuming and to top it all off they raised me again the next month and I paid on the due date. They are not relaxing on the interest rates and the best you can do is make sure you pay early so they have no reason to reason to raise your rates.
One of the companies forcing people to file credit card bankruptcy is Juniper or Barclay's bank. They are instrumental in raising interest rates without telling you or giving a logical reason. All of us are in tough times right now and many are losing their jobs almost daily. There simply no answer if you cannot find another job in a decent amount of time. If a credit card company raises your rate so high that your minimum payment goes from 70 dollars a month to 240 dollars a month its just not acceptable.
Sometimes We Need Some Bankruptcy Help
Bankruptcy is becoming more and more common in this recession we are currently going through. You hear of big time corporations filing for bankruptcy almost every week and it seems there is no end in sight yet. This does not mean that we are doomed from the start it just means we have to spend smarter and work harder to keep what we have. Not all Americans can afford to do that and many are losing their jobs daily. This forces many to have to ease the stress that losing your job has on a family. If you are one that does not handle pressure well then you need to get some help and see a counselor to help remedy your current situation. It is not an easy road when you have a family and you are the provider. It almost makes you feel inferior and worthless to keep going. You have to get right back on the horse and try again.
Many of us are not familiar with how to file bankruptcy and in many states you have to go through counseling before you can even file. They want you to exhaust all possibilities before taking the plunge. This is a good thing because often times you can avoid filing bankruptcy if creditors are willing to work with you. Many of them can and do for that very reason. You have to remember that it stays on your record forever. It will always be on your credit report even though they tell you that it is not looked at after 7 years.
Many of us are not familiar with how to file bankruptcy and in many states you have to go through counseling before you can even file. They want you to exhaust all possibilities before taking the plunge. This is a good thing because often times you can avoid filing bankruptcy if creditors are willing to work with you. Many of them can and do for that very reason. You have to remember that it stays on your record forever. It will always be on your credit report even though they tell you that it is not looked at after 7 years.
Avoid Company Bankruptcy (Liquidation) Using Company Voluntary Arrangement (CVA)
If your company is suffering from financial difficulties and is struggling to pay its creditors you may be thinking about cutting your losses and closing the company down. This process is commonly known as company bankruptcy. The formal term is actually company liquidation. If a company is liquidated, the company's trading is stopped and its assets are sold and turned into cash or "liquidated".
Before deciding to liquidate your company, it is worth considering whether there may be a possibility of saving the business. If you believe your business has a future but is just being dragged down by the weight of its creditors, one option you can consider is a Company Voluntary Arrangement (CVA).
A company voluntary arrangement is a formal legal agreement with the company's creditors to settle the business's debt. The creditors agree to accept reduced payments based on what the business can afford paid over a fixed period, normally between 2-5 years. Once the agreed number of payments has been made, the creditors agree to write off any outstanding debt and the business is free to continue trading debt free.
There are a number of advantages for a business if it decides to undertake a company voluntary arrangement. Clearly a significant advantage is that company debt is written off. However, as importantly, the CVA protects the business from further legal action by its creditors. This gives the company a breathing space so that business processes can be changed and the company can move forward once the arrangement has ended. The company itself remains intact therefore protecting key teams and staff. A CVA will also allow the company directors to avoid an investigation of wrongful trading which would occur if the business was liquidated.
Saving a company from liquidation using a company voluntary arrangement also has advantages for creditors. Ultimately, the business remains and if properly managed, can continue to trade with historical suppliers into the future. As such, business relationships which may be important for both the business and its suppliers can be maintained.
Of course, there are some risks to the success of a company voluntary arrangement. Typically, the management team in the business stay the same and therefore unpalatable changes such as cost cutting which may be essential to the future of the business are not undertaken. If this is the case, then using a CVA may be simply putting off the day when the company is bankrupt and has to be liquidated. However, if the company directors and owners feel that the business has a future and they are prepared to undertake radical changes which will almost certainly be needed, than a company voluntary arrangement is an excellent way to avoid liquidation and preserve the business for the future.
Before deciding to liquidate your company, it is worth considering whether there may be a possibility of saving the business. If you believe your business has a future but is just being dragged down by the weight of its creditors, one option you can consider is a Company Voluntary Arrangement (CVA).
A company voluntary arrangement is a formal legal agreement with the company's creditors to settle the business's debt. The creditors agree to accept reduced payments based on what the business can afford paid over a fixed period, normally between 2-5 years. Once the agreed number of payments has been made, the creditors agree to write off any outstanding debt and the business is free to continue trading debt free.
There are a number of advantages for a business if it decides to undertake a company voluntary arrangement. Clearly a significant advantage is that company debt is written off. However, as importantly, the CVA protects the business from further legal action by its creditors. This gives the company a breathing space so that business processes can be changed and the company can move forward once the arrangement has ended. The company itself remains intact therefore protecting key teams and staff. A CVA will also allow the company directors to avoid an investigation of wrongful trading which would occur if the business was liquidated.
Saving a company from liquidation using a company voluntary arrangement also has advantages for creditors. Ultimately, the business remains and if properly managed, can continue to trade with historical suppliers into the future. As such, business relationships which may be important for both the business and its suppliers can be maintained.
Of course, there are some risks to the success of a company voluntary arrangement. Typically, the management team in the business stay the same and therefore unpalatable changes such as cost cutting which may be essential to the future of the business are not undertaken. If this is the case, then using a CVA may be simply putting off the day when the company is bankrupt and has to be liquidated. However, if the company directors and owners feel that the business has a future and they are prepared to undertake radical changes which will almost certainly be needed, than a company voluntary arrangement is an excellent way to avoid liquidation and preserve the business for the future.
Avoid Company Bankruptcy (Liquidation) Using a Pre-Pack Or Phoenix
If your company is no longer financially viable in its current form, you may be looking at closing (or liquidating) the business. However, if you believe that the business idea remains a good one and if set up perhaps in a slightly different format the company could succeed, an option that you should look at is Pre Pack Liquidation, commonly known as Phoenixing.
Pre Pack liquidation is a process where a new limited company is formed, often by the management team of the old business. An agreement is then made for the new company to buy the assets of the old firm. The assets may include physical equipment, client lists and goodwill and even the rights to use the old company name. The old business is then closed (or liquidated). Any creditors who have outstanding balances with the old company are paid as far as possible from the proceeds of the liquidated assets. However, they have no claim over the new company for any outstanding debt.
Clearly, where the core business idea remains viable the advantage of setting up a new company is that this can be done using the lessons learnt from the old firm. The positive elements from the old business can be retained and developed and the less productive elements discarded. The fact that the legacy debt of the old business is left behind is also of significant benefit allowing the new entity the best chance of success.
Of course, there are a number of areas that need consideration before undertaking a pre pack liquidation. The main one of these is that funds will need to be raised to pay for the purchase of the old company's assets. A formal valuation will have to be undertaken ensuring that the price paid reflects the true market value. Very often the funds required may have to be borrowed or raised perhaps through an asset refinance scheme.
Over the past few months, there have been various negative views of pre pack liquidation. The main reason for this is that there is an understandable perception that the creditors of the old business are left high and dry because of the Pre Pack process. This is in fact not the case. The only time that a pre pack would be used is where a company is struggling and at risk of bankruptcy. If nothing is done, the likelihood is that the business will be closed anyway. If the business is liquidated under these circumstances, any assets would be sold as distressed and normally below market price thus leaving creditors with very little if any return. As such, a pre pack often gives the best opportunity to realise the value of the business' assets and return something to creditors.
In its strictest sense, opting for a pre pack liquidation does not avoid the bankruptcy and subsequent closure or liquidation of the original company. However, it does allow a new business to be generated which is in a far better position to continue to trade successfully preserving jobs and a customer for its suppliers into the future.
Pre Pack liquidation is a process where a new limited company is formed, often by the management team of the old business. An agreement is then made for the new company to buy the assets of the old firm. The assets may include physical equipment, client lists and goodwill and even the rights to use the old company name. The old business is then closed (or liquidated). Any creditors who have outstanding balances with the old company are paid as far as possible from the proceeds of the liquidated assets. However, they have no claim over the new company for any outstanding debt.
Clearly, where the core business idea remains viable the advantage of setting up a new company is that this can be done using the lessons learnt from the old firm. The positive elements from the old business can be retained and developed and the less productive elements discarded. The fact that the legacy debt of the old business is left behind is also of significant benefit allowing the new entity the best chance of success.
Of course, there are a number of areas that need consideration before undertaking a pre pack liquidation. The main one of these is that funds will need to be raised to pay for the purchase of the old company's assets. A formal valuation will have to be undertaken ensuring that the price paid reflects the true market value. Very often the funds required may have to be borrowed or raised perhaps through an asset refinance scheme.
Over the past few months, there have been various negative views of pre pack liquidation. The main reason for this is that there is an understandable perception that the creditors of the old business are left high and dry because of the Pre Pack process. This is in fact not the case. The only time that a pre pack would be used is where a company is struggling and at risk of bankruptcy. If nothing is done, the likelihood is that the business will be closed anyway. If the business is liquidated under these circumstances, any assets would be sold as distressed and normally below market price thus leaving creditors with very little if any return. As such, a pre pack often gives the best opportunity to realise the value of the business' assets and return something to creditors.
In its strictest sense, opting for a pre pack liquidation does not avoid the bankruptcy and subsequent closure or liquidation of the original company. However, it does allow a new business to be generated which is in a far better position to continue to trade successfully preserving jobs and a customer for its suppliers into the future.
Top 4 Bankruptcy Related FAQs
1. Will Bankruptcy put an end to all the harassment from my creditors
If the bankruptcy documents are in order, no legal action will be taken against the debtor. No action is contemplated for repayment, arising out of this. Stay is vacated for non-payment in the case of Secured creditors.
2. Can the spouse be affected?
If the spouse is not a signing party to the agreement/contract, the spouse will not attract penal action. If the spouse is having an add-on card, he/she is likely to be held responsible for the debt. Under certain special circumstances, either spouse is dragged to the court even in the absence of the signature. In rare cases with regard to purchase/sale of property, signatures of both the spouses are required while in routine debts, signature of either spouse is not insisted upon.
3. Will I never be able to get credit again?
Credit limit, corresponding to the security, will be increased. On par with the other debtors, Two years after discharge, they are eligible for mortgage loans, with the same financial profile, who failed to file Chapter 7. The fees for the Filing of Chapter 7 are far less than the down payment and income stability is of prime significance. Credit report regarding filing of Chapter 7 or Chapter 13 remains for 10 years.
4. How much does it cost to file for bankruptcy?
The cost of filing a bankruptcy case is very little. Though free initial consultation is available, there is variation in the lawyer's fee range. You can pare it down by proper planning. Fees can also be minimized by not requiring the lawyer to attend the meeting of creditors. In some states such as Massachusetts, attorneys must attend the Section 341 meeting with the debtors otherwise attorneys are deemed to have NOT represented the debtors.
Considering the amount of humiliation, one has to undergo in the society, in such trying circumstances, it is felt that even though the lawyer's fee is a bit high, it is worth engaging the lawyer.
If the bankruptcy documents are in order, no legal action will be taken against the debtor. No action is contemplated for repayment, arising out of this. Stay is vacated for non-payment in the case of Secured creditors.
2. Can the spouse be affected?
If the spouse is not a signing party to the agreement/contract, the spouse will not attract penal action. If the spouse is having an add-on card, he/she is likely to be held responsible for the debt. Under certain special circumstances, either spouse is dragged to the court even in the absence of the signature. In rare cases with regard to purchase/sale of property, signatures of both the spouses are required while in routine debts, signature of either spouse is not insisted upon.
3. Will I never be able to get credit again?
Credit limit, corresponding to the security, will be increased. On par with the other debtors, Two years after discharge, they are eligible for mortgage loans, with the same financial profile, who failed to file Chapter 7. The fees for the Filing of Chapter 7 are far less than the down payment and income stability is of prime significance. Credit report regarding filing of Chapter 7 or Chapter 13 remains for 10 years.
4. How much does it cost to file for bankruptcy?
The cost of filing a bankruptcy case is very little. Though free initial consultation is available, there is variation in the lawyer's fee range. You can pare it down by proper planning. Fees can also be minimized by not requiring the lawyer to attend the meeting of creditors. In some states such as Massachusetts, attorneys must attend the Section 341 meeting with the debtors otherwise attorneys are deemed to have NOT represented the debtors.
Considering the amount of humiliation, one has to undergo in the society, in such trying circumstances, it is felt that even though the lawyer's fee is a bit high, it is worth engaging the lawyer.
Why Do You Need Experienced Bankruptcy Lawyers?
It is hard to define Bankruptcy as you are one among the 2 million people who filed for personal bankruptcy. Since there are a number of sponsoring lawyers area-wise, it is advisable to approach your area lawyer for evaluating your financial situation. Chapter 7 and Chapter 13 bankruptcy are very well known. By approaching the lawyers who specialize in handling exclusive bankruptcy cases, you are assured of perfect legal advice at the time of your filing bankruptcy case. Protection of your rights and property is the sole responsibility of the lawyers dealing with Bankruptcy cases.
It should be the commitment of the bankruptcy lawyer to make you feel comfortable without undergoing mental agony till the case is finalized. The lawyer should also equip you with the latest valuable information from time to time so that you are not kept in dark.
Texas bankruptcy lawyers are experienced attorneys in Dallas, Fort Worth, Houston and many other locations to serve you. Contact one of our California bankruptcy offices in Sacramento, San Diego, Los Angeles or Bakersfield to discuss your possible case.
Nevada Bankruptcy Attorneys can help you choose Chapter 7, Chapter 13 bankruptcy or alternative to help you get effective debt relief.
If you need debt advice in Ohio, let a Cincinnati or Columbus bankruptcy attorney give you the answers you are searching for.
New York bankruptcy attorneys know the complicated bankruptcy laws well. Let them walk you through the process and be on your way to a better tomorrow.
A Florida Bankruptcy attorney will work hard to provide you with the best service and legal representation possible. They are specialized in consumer debt and are highly skilled in all areas of the bankruptcy law. Let a personal bankruptcy lawyer help you get the relief that you need and deserve.
It should be the commitment of the bankruptcy lawyer to make you feel comfortable without undergoing mental agony till the case is finalized. The lawyer should also equip you with the latest valuable information from time to time so that you are not kept in dark.
Texas bankruptcy lawyers are experienced attorneys in Dallas, Fort Worth, Houston and many other locations to serve you. Contact one of our California bankruptcy offices in Sacramento, San Diego, Los Angeles or Bakersfield to discuss your possible case.
Nevada Bankruptcy Attorneys can help you choose Chapter 7, Chapter 13 bankruptcy or alternative to help you get effective debt relief.
If you need debt advice in Ohio, let a Cincinnati or Columbus bankruptcy attorney give you the answers you are searching for.
New York bankruptcy attorneys know the complicated bankruptcy laws well. Let them walk you through the process and be on your way to a better tomorrow.
A Florida Bankruptcy attorney will work hard to provide you with the best service and legal representation possible. They are specialized in consumer debt and are highly skilled in all areas of the bankruptcy law. Let a personal bankruptcy lawyer help you get the relief that you need and deserve.
Avoid Company Bankruptcy (Liquidation) Using Business Refinancing
In the midst of an economic downturn, many companies find themselves at risk of failure because they do not have enough cash to maintain their day to day business activities. This may be the case, even if there is a strong order book as customers fail to pay invoices on time as they in turn are trying to preserve cash. There is also the increased risk that the customers themselves may stop trading, leaving outstanding invoices unpaid.
Unfortunately, one of the reasons for the current recession in the UK is the lack of available funding through traditional routes such as bank loans and commercial mortgages. High Street banking institutions are currently extremely reluctant to lend because of the huge bad debt risks they have exposed themselves to over the past 5-10 years. Faced with this situation, it is not surprising that many businesses are running out of cash and considering bankruptcy and liquidation.
Where a company requires additional working capital (cash) but is not being supported by traditional banking services, there are other funding options which should be considered collectively known as business re-financing. The most significant of these are as follows:
* Asset refinancing Raising finance secured on the value of assets (normally plant and machinery) which are owned by the business.
* Invoice financingRaising finance on the strength of invoices already raised for work carried out. Money is paid up front by the financing company and then collected over time when invoices are paid.
* Trade financing Finance provided to enable a company to fulfill a confirmed order. The finance company will normally pay suppliers directly and in turn invoice the end customer. Once the customer has paid, adhering to the typical payment terms, the finance company releases any profits back to the business.
Business refinancing can make available much needed funding where traditional banking services are unwilling to support the company. Asset refinancing is a particularly useful tool in this regard as the lender is given the added security of the asset against which the finance is raised.
Of course, there are certain elements of the business refinancing process which have to be carefully considered. The main one of these is that personal guarantees will have to be given by the company directors / owners. This is of course no different to a standard business loan. However, the business refinance loan will be based on the availability of real company assets or actual invoices or orders thus reducing the risk of the loan not being paid and guarantees being called into play.
Where a company is facing bankruptcy and liquidation due to a starvation of cash, all possible options to secure the required finance should be considered. Business refinancing may not be suitable for all businesses. Nevertheless, where suitable, it can certainly provide a viable alternative to traditional sources of finance such as bank loans and commercial mortgages.
Unfortunately, one of the reasons for the current recession in the UK is the lack of available funding through traditional routes such as bank loans and commercial mortgages. High Street banking institutions are currently extremely reluctant to lend because of the huge bad debt risks they have exposed themselves to over the past 5-10 years. Faced with this situation, it is not surprising that many businesses are running out of cash and considering bankruptcy and liquidation.
Where a company requires additional working capital (cash) but is not being supported by traditional banking services, there are other funding options which should be considered collectively known as business re-financing. The most significant of these are as follows:
* Asset refinancing Raising finance secured on the value of assets (normally plant and machinery) which are owned by the business.
* Invoice financingRaising finance on the strength of invoices already raised for work carried out. Money is paid up front by the financing company and then collected over time when invoices are paid.
* Trade financing Finance provided to enable a company to fulfill a confirmed order. The finance company will normally pay suppliers directly and in turn invoice the end customer. Once the customer has paid, adhering to the typical payment terms, the finance company releases any profits back to the business.
Business refinancing can make available much needed funding where traditional banking services are unwilling to support the company. Asset refinancing is a particularly useful tool in this regard as the lender is given the added security of the asset against which the finance is raised.
Of course, there are certain elements of the business refinancing process which have to be carefully considered. The main one of these is that personal guarantees will have to be given by the company directors / owners. This is of course no different to a standard business loan. However, the business refinance loan will be based on the availability of real company assets or actual invoices or orders thus reducing the risk of the loan not being paid and guarantees being called into play.
Where a company is facing bankruptcy and liquidation due to a starvation of cash, all possible options to secure the required finance should be considered. Business refinancing may not be suitable for all businesses. Nevertheless, where suitable, it can certainly provide a viable alternative to traditional sources of finance such as bank loans and commercial mortgages.
Bankruptcy Protection - How to Go About It
You can file for bankruptcy protection under the bankruptcy laws, if you are finding it difficult to repay your creditors. Bankruptcy protection involves having most of your debt canceled with the inclusion of selling off some of your assets. The other option could be to have an organized plan to pay off the debts. If you are in business, a bankruptcy protection can be a source of debt relief from debts and contracts, should the business continue operating. You could also choose to sell the business' assets and use the money to pay off debtors.
There are two forms of bankruptcy regularly used by individuals. There is Chapter 7 and Chapter 13. A chapter, in this case, refers to the chapter of the bankruptcy code that explains each one of them. Another reference of Chapter 7 would be liquidation or straight bankruptcy where your assets are controlled by an appointed trustee. The trustee has the authority to sell off your assets and use the money to pay off creditors. However, different states have different laws and in some states, you are allowed to keep some personal property.
On the other side, the Chapter 13 which is also known as the "wage earner bankruptcy" permits you to request for a repayment plan without interest over a period of between three to five years. Your plan has to be approved by the court and you are protected from the creditors. They cannot seize your assets and sell them off to pay back what is owed to them. Your creditors are also required to abide by the provisions of the repayment agreement.
Businesses have the option of seeking bankruptcy protection under chapter 7 and chapter 11. Chapter 11 involves restructuring of assets. Just like chapter 13, the chapter 11 option proposes a repayment plan, within a specified time period. The creditors are thereafter expected to create a plan. The nature of bankruptcy laws can be complex, so it is always advisable to retain counsel.
There are two forms of bankruptcy regularly used by individuals. There is Chapter 7 and Chapter 13. A chapter, in this case, refers to the chapter of the bankruptcy code that explains each one of them. Another reference of Chapter 7 would be liquidation or straight bankruptcy where your assets are controlled by an appointed trustee. The trustee has the authority to sell off your assets and use the money to pay off creditors. However, different states have different laws and in some states, you are allowed to keep some personal property.
On the other side, the Chapter 13 which is also known as the "wage earner bankruptcy" permits you to request for a repayment plan without interest over a period of between three to five years. Your plan has to be approved by the court and you are protected from the creditors. They cannot seize your assets and sell them off to pay back what is owed to them. Your creditors are also required to abide by the provisions of the repayment agreement.
Businesses have the option of seeking bankruptcy protection under chapter 7 and chapter 11. Chapter 11 involves restructuring of assets. Just like chapter 13, the chapter 11 option proposes a repayment plan, within a specified time period. The creditors are thereafter expected to create a plan. The nature of bankruptcy laws can be complex, so it is always advisable to retain counsel.
New Bankruptcy Laws - What You Need to Know Before Taking Action
It is becoming difficult for some individuals to file for bankruptcy due to the new bankruptcy laws. These laws will make it more difficult for consumers to prove that they qualify for the Chapter 7 bankruptcy which is regarded as fast and easy.
In a chapter 7 bankruptcy, your assets are sold off and the proceeds distributed among the creditors. Your debts are canceled and you get a fresh start. Because majority of the people filing for this particular bankruptcy are without assets, credit card companies and other creditors sometimes get no repayments. In the Chapter 13 option, you create a repayment plan for a maximum of five years. Should there be debts that are not included in the plan, then you are not required to repay them. If you have a higher income, you may not be permitted to file under chapter 7. You will instead be required to repay some of the debts under Chapter 13.
The new law will permit fewer people to file under Chapter 7 therefore being forced to file under Chapter 13. This is in a bid to prevent consumers from abusing bankruptcy laws. They will now be clearing debts that are pocket friendly.
Another requirement of the new bankruptcy laws is that debtors will now have to go for debt counseling before filing for bankruptcy. There is also a requirement for additional counseling on how to manage debt and budgeting before your debts can be eliminated. With these new changes to the bankruptcy laws, the option for anyone to choose what they think is best suited for them has been left in the hands of the law.
In a chapter 7 bankruptcy, your assets are sold off and the proceeds distributed among the creditors. Your debts are canceled and you get a fresh start. Because majority of the people filing for this particular bankruptcy are without assets, credit card companies and other creditors sometimes get no repayments. In the Chapter 13 option, you create a repayment plan for a maximum of five years. Should there be debts that are not included in the plan, then you are not required to repay them. If you have a higher income, you may not be permitted to file under chapter 7. You will instead be required to repay some of the debts under Chapter 13.
The new law will permit fewer people to file under Chapter 7 therefore being forced to file under Chapter 13. This is in a bid to prevent consumers from abusing bankruptcy laws. They will now be clearing debts that are pocket friendly.
Another requirement of the new bankruptcy laws is that debtors will now have to go for debt counseling before filing for bankruptcy. There is also a requirement for additional counseling on how to manage debt and budgeting before your debts can be eliminated. With these new changes to the bankruptcy laws, the option for anyone to choose what they think is best suited for them has been left in the hands of the law.
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