Planning For Filling Bankruptcy Law
In terms of the bankruptcy law, some dramatic changes have been recently made
in the USA. Just in case you find yourself in a ‘bankruptcy’ situation,
it would help to know what these changes in the law are and where should you
be filing for bankruptcy.
Before the actual look at the major changes that have occurred, it would
pay to learn a little about what the different kinds of bankruptcy are,
that one can now file for.
Chapter 7 Law - This is the most commonly used law of in terms of bankruptcy
one can file for. After filling 7 is filed, a trustee is appointed to oversee
the property and assets of the person who has filed for bankruptcy. If possible,
some of the concerned person’s assets are obtained, with a view to sell
them off and raise money to pay back the person’s creditors. Though it
is not possible to wipe out all types of debts of a person, even after filing
a Chapter 7, most of the debts are cancelled in their entirety.
Chapter 11 Law – Though businesses more commonly use this type of bankruptcy
filing, individuals can use a Chapter 11. However, many people do not like
to use this form of bankruptcy often because it can prove to be expensive and
complex. Mostly, people, who have debts above the limits set in a Chapter 13
bankruptcy filing, are most likely to file a Chapter 11. The advantage of this
particular bankruptcy is that a business can continue operating, and actually
gets sheltered from some of its debts.
Chapter 13 Law - A person can up with a proposed repayment plan to pay back
all their creditors through a Chapter 13. Just as in the case of a Chapter
7, the court appoints a trustee who is supposed to collect the payments from
the person who has filed a Chapter 13, and then pay the money to the creditors.
The appointment of a trustee in a filling 13 bankruptcy filing is to ensure
that, at all times, the person filing complies with the repayment plan that
has been decided upon. A point to be noted is that in a filling 13, your debts
are not wiped out.
With this basic information about the kinds of bankruptcy that one can file
for, comes the time to take a look at the changes that the bankruptcy law has
undergone. The changes in the eligibility criterion for bankruptcy using Chapter
7, is the most important change to have taken place. The changes imply that
the law now prohibits people who have a considerably high income from actually
filing a Chapter 7.
Therefore, it is the ‘means’ test that determines whether or a
person is actually eligible to file. In case, your income is higher than what
is considered as the median income for a Chapter 7, you will need to file a
Chapter 13 instead.
Moreover, with the change in the bankruptcy law, before actually filing
a bankruptcy case, people who owe money would need to get credit counseling.
Additional counseling would also need to be undergone, with regards to budgeting,
to guide people to best manage their debts before they can actually be wiped
out or their assets liquidated.
Get quality information before filling the bankruptcy
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