Bankruptcy Relief Is One Sure Way For A Person, To Be Able, Or A Business To Make A Fresh Start In Their Financial Affairs

Category: Finance.

Bankruptcy relief is one sure way for a person, to be able, or a business to make a fresh start in their financial affairs. Obtaining legal relief from becoming broke is a vehicle provided for under Federal laws.

Usually, filing for brokeness comes after the individual or company has run into extreme financial difficulties, but once they have filed a new bankrupt claim, they are protected from lawsuits and collection harassments from creditors. During the course of the bankruptcy claim form process, the assets and the liabilities of the debtor are assessed. Most individuals end up filing a Chapter 7 or filing Chapter 13 one. Based on the specific situation of the debtor and the amount of debt owed, the type of it to be filed will be determined. In most instances, business entities will reorganize their debts under the structure of a Chapter 11 type. Because of the complexity of this issue, it is recommended that people get help with bankruptcy from an experienced lawyer who can guide them through the process of attaining bankruptcy relief.

There are some very specific rules and regulations when it comes to filing for bankruptcy and which Chapter is applicable. Obtaining legal relief from becoming broke is a step that is considered drastic and it should not be undertaken lightly. Many times the root cause of the financial problems comes because of the loss of a job, extended illness or, a business failure injury, divorce or the death of a family member. In many cases, people decide that seeking legal relief is the course they must take after there has been some sort of extreme financial setback or some type of emergency. When the financial pressures mount to the breaking point, legal relief can become the only option someone is able to exercise in order to find a way to help debts and secure a clean slate. However, this stigma has faded somewhat in more recent years, as it is seen more in a light of giving people an opportunity to start over again rather than as a failure. For many years, there was a significant stigma associated with people who ended up filing for it.

There are two main types of legal relief from becoming broke. Since the new bankrupt reform rules, most of the time only those with a very low income or those who are considered to be less stable debtors are eligible for the liquidation option. The first type, which was the most common until the 2005 bankruptcy reform legislation, is liquidation. The second type of it is reorganization. Liquidation bankruptcy relief is governed under the mandates of the Chapter 7 type claim form and can be filed by either businesses or by individuals. This type allows for the debts to be structured and paid over a period of time.

When filing for brokeness under Chapter 7, the court issues what is called an" automatic stay, " which stops all attempts to collect any debts that are included in the court record filing. The distribution is done in order of priority which is determined by the bankruptcy statues. A bankruptcy trustee is assigned to the case and is responsible to collect any" nonexempt" property, and then distribute, to liquidate it the proceeds of the liquidation of assets to the creditors. In most cases, reorganization bankruptcy relief is implemented in situations where there is sufficient future income that can be used in a repayment plan. Business and individuals with a great deal of debt, file under Chapter 11 bankruptcy. Usually the plan is for repayment of a portion of the full debt and the amount of the repayment is determined by the trustee and based on the debtors ability to pay.

In most cases, individuals who need, however to reorganize their debts will file Chapter 13 bankruptcy.

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This guide has been prepared by the Zetland Financial Group Limited and is intended for the information of clients or prospective clients. The information set out is not, nor is it intended to be, exhaustive.