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Bankruptcy:
Bankruptcy is the inability to discharge all your debts as they come due; "the company had to declare bankruptcy"; "fraudulent loans led to the failure of many banks"
Bankruptcy is a legal process intended to insure equality among the creditors of a corporation declared to be insolvent. It is a legally declared inability or impairment of ability of an individual or organization to pay their creditors. A declared state of bankruptcy can be requested or initiated by the bankrupt individual or organization, or it can be requested by creditors in an effort to recoup a portion of what they are owed.
Generally for consumers, there are two types of Bankruptcy, viz; Chapter 7, which is total liquidation, and Chapter 13, that is reorganization, where a portion of your debts are repaid.
At bankrupcy.yourtoys.co.uk, we will suggest you not to go for bankruptcy treating as it as the last option. There are a lot more alternatives to avoid bankruptcy and to get back the good credit history.
Most people know that by choosing bankruptcy, they may have difficulty financing a home, car or any other large purchase. If you think you are not in the position to purchase these things anyway, which makes bankruptcy an attractive choice, consider this: many people have found it difficult to rent an apartment or secure a school loan because of a bankruptcy on their credit report.
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FAQ's
( We need to mention that below information is according to available online information and we are only suggesting this information. We recommend to consult your bankruptcy lawyer before taking any decision.)
1. What is Bankruptcy?
Bankruptcy is state of complete lack of some abstract property; "spiritual bankruptcy"; "moral bankruptcy"; "intellectual bankruptcy". It is inability to discharge all your debts as they come due; "the company had to declare bankruptcy"; "fraudulent loans led to the failure of many banks". Bankruptcy is a legal process intended to insure equality among the creditors of a corporation declared to be insolvent. It is a legally declared inability or impairment of ability of an individual or organization to pay their creditors. A declared state of bankruptcy can be requested or initiated by the bankrupt individual or organization, or it can be requested by creditors in an effort to recoup a portion of what they are owed.
2. What kinds of Bankruptcies are there?
Generally for consumers, there are two types of Bankruptcies, viz; Chapter 7, which is total liquidation, and Chapter 13, that is reorganization, where a portion of your debts are repaid.
3. What is chapter 7 Bankruptcy?
Chapter 7 bankruptcy, also known as straight bankruptcy is a liquidation proceeding. The debtor turns over all non-exempt property to the bankruptcy trustee who then converts it to cash for distribution to the creditors. The debtor receives a discharge of all dischargeable debts usually within four months. In the vast majority of cases the debtor has no assets that he would lose so Chapter 7 will give that person a relatively quick "fresh start".
4. What are the general reasons for a Chapter 7 Bankruptcy?
The most general reasons for filing bankruptcy are:
- Unemployment: Large medical expenses; Seriously overextended credit; Marital problems, and;
- Other large unexpected expenses
5. What is Chapter 13 Bankruptcy?
Chapter 13 Bankruptcy is also known as a reorganization bankruptcy. Chapter13 bankruptcy is filed by individuals who want to pay off their debts over a period of three to five years. This type of bankruptcy appeals to individuals who have non-exempt property that they want to keep. It is also only an option for individuals who have predictable income and whose income is sufficient to pay their reasonable expenses with some amount left over to pay off their debts.
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6. Which is best among both for me?
Your Bankruptcy lawyer should be able to help you with this question. In general, if after taking into account your monthly financial statement, including all your reasonable bills, if you still have money left over to make a contribution towards your debt, then a Chapter 13 bankruptcy might be best. If you do not have any excess income after paying your monthly minimum expense, then a Chapter 7 can be the best option for you.
7. What is the difference between Chapter 7 and Chapter 13 bankruptcy?
In Chapter 7 bankruptcy, you ask the bankruptcy court to discharge most of the debts you owe. In exchange for this discharge, the bankruptcy trustee can take any property you owe that is not exempted from collection, sell it, and distribute the proceeds to your creditors.
In Chapter 13 bankruptcy, you file a repayment plan with the bankruptcy court to pay back your debts over time. The amount you'll have to repay depends on how much you earn, the amount and types of debt you owe, and how much property you own.
8. Am I free to decide between Chapter 7 and Chapter 13?
If you meet the eligibility requirements for both, then you can choose which type of bankruptcy makes the most sense for your situation. Under the new bankruptcy law, filers whose incomes are higher than the median income for a family of their size in their state may not be allowed to file for Chapter 7 bankruptcy if their disposable income, after subtracting certain allowed expenses and required debt payments, would allow them to pay back some portion of the unsecured debt over a five-year repayment period.
9. Which type of bankruptcy will be useful for me?
Most people who file for bankruptcy choose to use Chapter 7 bankruptcy, if they meet the eligibility requirements; Chapter 7 bankruptcy is a popular choice because, unlike Chapter 13 bankruptcy, it doesn't require filers to pay back any portion of their debts.
However, Chapter 13 bankruptcy might be a better choice, depending on your situation. For example, if you are behind on your mortgage and want to keep your house, you can include those arrearages in your Chapter 13 bankruptcy plan and repay them over time. In Chapter 7 bankruptcy, you would either have to make up the whole past due amount right away -- and you might lose your house, if your equity exceeds the exemption amount available to you.
10. Is there any need to keep any asset as security?
Yes, you need to keep your exempted property. Your exempted property may include real property that you live in as your home, any other personal property, your personal automobile and certain retirement accounts.
11. What about the asset or property which I kept for collateral for a loan?
You are supposed to be in agreement to continue for paying the loan, otherwise the lender will become eligible to take the property back from you. It is very common for a person in bankruptcy to keep paying on their car or house and then keep these items. You might also be able to keep certain credit cards if you agree to "reaffirm" these debts. However, all reaffirmation agreements are subject to Court approval.
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12. Can I use my credit cards as collateral for a loan?
Most of the credit cards are unsecured, means there is no property put up as collateral for the debt. But few credit cards are often secured. This means you may have to give the property back that you purchased with the card if you want to discharge the debt.
13. What is the procedure for Bankruptcy?
A detailed petition listing all of your property, debts and other financial details is filed with the Court. After a short period, there will be a meeting with the bankruptcy trustee that is must for you to attend. In general, this is the only manifestation required. Unless there are problems or one of your creditors object, the discharge will be granted a few months later.
14. How long does bankruptcy stay on my record?
Usually, credit agencies can report bankruptcy for a period of ten years. But a bankruptcy is a court document, open to the public.
15. If I am married, does my spouse also have to go bankrupt?
No, a single or joint petition can be filed. However, complications can arise if one party is transferring assets to other spouse. Competent legal advisor can advise you if a single or joint petition is right for you or not.
16. Will I be allowed to keep any credit card after filing Bankruptcy?
Whether a debtor keeps credit cards after filing bankruptcy is up to the credit card company. If you discharge a credit card, they will cancel the card if you reaffirm the debt. Even if you have a zero balance in your account, the credit card company may cancel your credit card.
17. Can I again apply for credit in future after filing?
Yes! Most of the banks now offer "secured" credit cards where a debtor puts up a certain amount of money in an account at the bank to guarantee payment. Generally, credit limit is equal to the security kept with the creditor and is increased as the debtor proves the ability to pay the debt. Debtors are eligible for mortgage loans on terms as good as those of others, with the same financial profile, who has not filed bankruptcy, two years after bankruptcy discharge. The installment of your down payment and the steadiness of your income will be much more important than the fact you filed bankruptcy in the past.
18. How can I go into Bankruptcy?
There are two ways a person can become a bankrupt. The first and most common way is to have the person file a petition to voluntarily go bankrupt. The second, and hardly ever used way, is for creditors to ask the Court to make an Order that a person is bankrupt. In both these cases a Bankruptcy Trustee is required to manage the bankruptcy.
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19. When can I file again if I had been a Bankrupt in past?
You can file Chapter 7 bankruptcy again if it has been more than 8 years since you had been discharged from the previous Chapter 7 bankruptcy.
20. Do I have to consult a lawyer to go Bankrupt?
You do not need to have a lawyer to file Chapter 7 for yourself or Chapter 13. However, we recommend you to use the services of an experienced bankruptcy attorney as bankruptcy is complex procedure. A bankruptcy lawyer is well worth the cost. You will save the cost of the legal fees many times over through peace of mind, release of stress and probably actual money saved in following your bankruptcy attorney's advice.
21. Will filing for bankruptcy protect me from creditors' efforts to collect what I owe?
When you file any kind of bankruptcy, term called an "automatic stay" goes into effect. The automatic stay prohibits most creditors from taking any action to collect the debts you owe them unless the bankruptcy court lifts the stay and lets the creditor proceed with collections.
22. Will all of my debts be taken off in bankruptcy?
It depends on the type of debts you owe. Certain debts cannot be discharged in bankruptcy; you will continue to owe them just as if you had never filed for bankruptcy. These debts include back child support, alimony, and certain kinds of tax debts. Student loans will not be discharged unless you can show that repaying the debt would be an undue burden -- and this is a very tough standard to meet. And other types of debts might not be discharged if a creditor convinces the court that the debt should survive your bankruptcy.
23. Will I have to give up all my assets?
No. The Bankruptcy Code provides that a debtor filing for bankruptcy can keep certain assets for a "fresh start" by exempting property from the bankruptcy estate.
The vast majority of bankruptcy cases are "no asset" cases, in which the debtors have claimed an exemption in everything they own; there are then no assets from which to pay creditors.
The exemptions that are available vary from state to state: this is the only area in which bankruptcy law is not the same in all states.
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24. Will bankruptcy stop my wage garnishments?
Yes. Once your case is filed, creditors are no longer entitled to garnish your wages for debts that existed at the beginning of the case. The only exception may be for on-going child or family support ordered by a court.
25. Are there debts that I cannot discharge?
Yes . The scope of debt discharge varies in each chapter: in Chapter 7, debts incurred by fraud, intentionally harmful actions, dishonesty, as well as priority taxes, unfiled taxes, family support, student loans and criminal fines and restitution cannot be discharged.
In Chapter 13, only family support, student loans, drunk driving judgments, and criminal restitution are non dischargeable.
26. Will Bankruptcy filing also affect the IRS?
The IRS must cease collection actions after a bankruptcy is filed, just like all other creditors. The automatic stay protects the debtor and the debtor's property. Whether the tax claim will survive the bankruptcy, (that is, whether it is no dischargeable) depends on many variables
27. If my income is high, will I be allowed to file bankruptcy?
Presently there are no fixed income standards for filing bankruptcy. The critical question asked about those filing Chapter 7 is whether a debtor has sufficient funds after payment of his necessary future living expenses to repay his debts.
28. How do I know which chapter to file?
Choosing which chapter of bankruptcy is best for you depend on what kind of debts you have, whether you are behind on secured debts, and whether you have the regular income necessary for Chapter 13.
29. What is the procedure to file bankruptcy?
A bankruptcy case starts by filing a petition, schedules of assets and liabilities, and a statement of financial affairs with the bankruptcy court and paying the filing fee.
You will be required to attend at least one meeting of creditors, in which the trustee and creditors who choose to come can ask you questions under oath about your financial affairs.
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30. How long does bankruptcy filing take?
The process in Chapter 7 from filing to receipt of the discharge order is between 3 to 6 months, usually. During that period, the debtor generally does not have to do anything other than attend the first meeting of creditors. The most time consuming part of filing bankruptcy is usually preparing the schedules necessary to file the case.
31. Can I get credit even after bankruptcy?
Filing bankruptcy does not prevent you from getting new credit. An entire class of lenders targets the recently bankrupt as customers! Immediately after a bankruptcy filing, you can expect credit to be more difficult to get, more expensive, and limited in amount. Two years after a bankruptcy discharge, debtors are eligible for mortgage loans on terms just as good as those with the same financial characteristics who have not filed bankruptcy. That is, in getting a home loan after a bankruptcy, the size of your down payment and the stability of your income will be much more important than the fact you filed bankruptcy in the past.
While the fact that you filed bankruptcy stays on your credit report for 10 years, it becomes less significant the more time elapses. In fact, you are probably a better credit risk after bankruptcy than before.
32. What is an Annulment of a Bankruptcy Order?
An order of annulment can only be made by the court and is a procedure which cancels a Bankruptcy Order
33. What is "Discharge from Bankruptcy"?
”Discharge from Bankruptcy” is the process which releases the debtor from the bankruptcy order and most of the debts which were owed when the order was made
34. List of debts, not written off, which you can be pursued?
There are a number of debts which can be enforced if not fully paid under the bankruptcy order:
- Court fines such as maintenance orders, Child Support Agency payments and any other fines made through family courts.
- Any debts included in the bankruptcy which were connected with fraud.
- Student Loans
- Any debts connected with or arising from personal injury claims.
- State benefit overpayments
- Secured Creditors.
However, the discharged bankrupt can request the courts permission not to pay the debt being pursued on the grounds of having recently being discharged from a bankruptcy order. Unless the pursued debt is related to fraud, the court can grant the request at its discretion.
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