Bankruptcy 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 by creditors in an effort to recoup a portion of what they are owed; however, in the overwhelming majority of cases, the bankruptcy is initiated by the bankrupt individual or organization.
Bankruptcy occurs when a business cannot meet its debt obligations and petitions a federal court either for reorganization of its debts or liquidation of its assets (although this action has a negative impact on a credit rating).
It also refers to statutes and judicial proceedings involving persons or businesses that cannot pay their debts and seek the assistance of the court in getting a fresh start. Under the protection of the bankruptcy court, debtors may be released from or "discharged" from their debts perhaps by paying a portion of each debt. Bankruptcy judges preside over these proceedings. The person with the debt is called the debtor and the people or companies to whom the debtor owes money are called creditors.
When you are unable to pay your debts, you submit yourself to the protection of the state. A person or business may voluntarily declare bankruptcy or may be petitioned into bankruptcy by his creditors. Once in bankruptcy, the person surrenders his assets to a trustee in bankruptcy who sells the assets for the benefit of the bankrupt's creditors, first the secured creditors then the unsecured creditors. Once a person is discharged from bankruptcy, none of his former creditors may pursue him for his former debts.
The primary purposes of the laws of bankruptcy are: (1) to give an honest debtor a "fresh start" in life by relieving the debtor of most debts, and (2) to repay creditors in an orderly manner to the extent that the debtor has the means available for payment.
There are two types of bankruptcy: Involuntary Bankruptcy, where creditors or lenders file a petition against the debtor (person in debt), and Voluntary Bankruptcy, where the debtor files a petition claiming inability to meet creditors' requirements.
Article Source: http://www.simplysearch4it.com/author-articles/3566/1.html
Saturday, November 3, 2007
Bankruptcy Information: A helping hand in trying times
Bankruptcy is a phrase heard and used by many. Individuals tend to have pre-conceived notions about bankrupts that they are individuals who are totally broke. But bankruptcy information can be a real eye opener for debtors who are contemplating bankruptcy and individuals who are seeking information about bankruptcy. It helps debunk all the myths attached to bankruptcy.
1) What is bankruptcy?
Bankruptcy is a legal term to formally identify an individual as bankrupt. It refers to the inability of any debtor or organization to pay their creditors. In majority of the cases, bankruptcy is initiated by debtors or organization themselves. The main purpose of bankruptcy law is to provide any honest debtor a chance to start afresh and to help a debtor repay his/her creditor/s in an orderly manner to the best extent possible by the debtor. Debtors are discharged of most of their financial obligations after their non-exempt assets have been distributed. Creditors can no longer harass debtors or continue any lawsuits once the debtor has opted for bankruptcy.
2) Implications of bankruptcy:
Filing bankruptcy is one of the hardest financial decisions. Debtors must carefully examine the implications of bankruptcy and choose it as a last resort to deal with financial troubles. Following are the implications of bankruptcy:
• Lose control over your assets (except items/equipment required for work/household purposes)
• Cannot act as director of a company/practice as a lawyer/chartered accountant
• Negative publicity as a bankruptcy is advertised in 'London Gazette' and a local newspaper
• Bankruptcy remains on record with credit agencies, land registry and other organizations
3) Common terms to understand bankruptcy
• Bankruptcy petition: Individuals who opt for bankruptcy need to formally request protection of the federal bankruptcy laws. It involves filling of two important forms-The petition (Insolvency Rules 1986 form 6.27) and the statement of affairs (Insolvency Rules 1986 form 6.28).
• Chapter 7 bankruptcy: This chapter of the bankruptcy code provides for 'liquidation'. The debtor's non-exempt property will be sold and the proceeds will be distributed among his/her creditors.
• Chapter 13 bankruptcy: This chapter of bankruptcy provides a reorganization plan for individuals with regular income. It allows a debtor to retain his/her property and pay back his/her debt within 3-5 years.
Debtors could also consider various alternatives to bankruptcy before filing for bankruptcy. IVA, debt consolidation loan, debt management etc are proven alternatives to bankruptcy which the debtor can consider before he/she files for bankruptcy.
For comprehensive bankruptcy information log on to www.bankruptcy-information.www-bankruptcy.co.uk.
Article Source: http://www.simplysearch4it.com/author-articles/10039/1.html
1) What is bankruptcy?
Bankruptcy is a legal term to formally identify an individual as bankrupt. It refers to the inability of any debtor or organization to pay their creditors. In majority of the cases, bankruptcy is initiated by debtors or organization themselves. The main purpose of bankruptcy law is to provide any honest debtor a chance to start afresh and to help a debtor repay his/her creditor/s in an orderly manner to the best extent possible by the debtor. Debtors are discharged of most of their financial obligations after their non-exempt assets have been distributed. Creditors can no longer harass debtors or continue any lawsuits once the debtor has opted for bankruptcy.
2) Implications of bankruptcy:
Filing bankruptcy is one of the hardest financial decisions. Debtors must carefully examine the implications of bankruptcy and choose it as a last resort to deal with financial troubles. Following are the implications of bankruptcy:
• Lose control over your assets (except items/equipment required for work/household purposes)
• Cannot act as director of a company/practice as a lawyer/chartered accountant
• Negative publicity as a bankruptcy is advertised in 'London Gazette' and a local newspaper
• Bankruptcy remains on record with credit agencies, land registry and other organizations
3) Common terms to understand bankruptcy
• Bankruptcy petition: Individuals who opt for bankruptcy need to formally request protection of the federal bankruptcy laws. It involves filling of two important forms-The petition (Insolvency Rules 1986 form 6.27) and the statement of affairs (Insolvency Rules 1986 form 6.28).
• Chapter 7 bankruptcy: This chapter of the bankruptcy code provides for 'liquidation'. The debtor's non-exempt property will be sold and the proceeds will be distributed among his/her creditors.
• Chapter 13 bankruptcy: This chapter of bankruptcy provides a reorganization plan for individuals with regular income. It allows a debtor to retain his/her property and pay back his/her debt within 3-5 years.
Debtors could also consider various alternatives to bankruptcy before filing for bankruptcy. IVA, debt consolidation loan, debt management etc are proven alternatives to bankruptcy which the debtor can consider before he/she files for bankruptcy.
For comprehensive bankruptcy information log on to www.bankruptcy-information.www-bankruptcy.co.uk.
Article Source: http://www.simplysearch4it.com/author-articles/10039/1.html
Warning: Debt Agreements could send you Bankrupt Anyway!
If you are in financial trouble right now and struggling thanks to bad credit, chances are you may have heard of a debt agreement and thought, "It's the answer to all of my problems." It's always best to talk to a professional before you make any decisions regarding what to do when you are in a bad credit situation, however in this article we'll take a look at debt agreements and examine how they can actually end up sending you bankrupt. That's right – they could end up driving you to that one place you don't want to go – bankrupt!
What is a Debt Agreement?
A debt agreement is a simple, legally binding agreement with your credit providers or lenders. It is considered to be an act of bankruptcy, however, you can still secure finance – including a mortgage – if you have a debt agreement. Legally, these are referred to as Part IX (Nine) and Part X (Ten) agreements and upon approval of your creditors (at least 75% or more of the dollar value of your debt) such arrangements can enable you to:
• Make a payment of less than the full amount of all or any of your debts, freeing up extra cash each month;
• Put a stop on the payment of your debts or a stop on the interest that accrues on your debts, allowing you to get some money together to make the payments; or
• Make a transfer of property from you to one or more of your creditors in lieu of full or part payment of the money you owe to them.
How Can a Debt Agreement send me Bankrupt?
As you can well imagine, or as you may know from personal experience, when you are struggling with bad credit, there are people out there who will exploit your vulnerability – even though it's not your fault! For instance, in setting up debt agreements, insolvency specialists and trustees may charge you exorbitant fees that you cannot afford, or they may set up a debt agreement that you cannot afford, which results in you not being able to meet the terms of your debt agreement. In other words, people can end up going bankrupt if they are bound by a poorly-suited debt agreement that they cannot afford.
Avoiding Bankruptcy Compliments of a Debt Agreement
To avoid bankruptcy caused by a debt agreement, the advice is quite plain and simple:
• Find a reputable trustee: A reputable trustee will work with your creditors, on your behalf to negotiate the debt down, which results in a debt agreement you can afford which will help you clear your debt.
• Avoid a debt agreement altogether: This can be done by finding a bad credit expert who will work with you to re-finance. This will result in re-payments that are easier to handle, which will ultimately help you reduce your debt.
• Honour the conditions of the debt agreement: Look at the debt agreement as an opportunity – not a punishment – to help you get out of debt. A good debt agreement will be affordable for you, so that over time, you will clear your debt and be financially secure.
For Further Information
Debt agreements and re-financing may sound to you like great ways to avoid bankruptcy, and this may well be the case for you. To determine for sure though, you need to consult with a bad credit specialist who will assess your situation and provide you with the guidance you need to own your own home and secure a financially independent future.
Call our team today and take the first step towards financial success!
Article Source: http://www.simplysearch4it.com/author-articles/10183/1.html
What is a Debt Agreement?
A debt agreement is a simple, legally binding agreement with your credit providers or lenders. It is considered to be an act of bankruptcy, however, you can still secure finance – including a mortgage – if you have a debt agreement. Legally, these are referred to as Part IX (Nine) and Part X (Ten) agreements and upon approval of your creditors (at least 75% or more of the dollar value of your debt) such arrangements can enable you to:
• Make a payment of less than the full amount of all or any of your debts, freeing up extra cash each month;
• Put a stop on the payment of your debts or a stop on the interest that accrues on your debts, allowing you to get some money together to make the payments; or
• Make a transfer of property from you to one or more of your creditors in lieu of full or part payment of the money you owe to them.
How Can a Debt Agreement send me Bankrupt?
As you can well imagine, or as you may know from personal experience, when you are struggling with bad credit, there are people out there who will exploit your vulnerability – even though it's not your fault! For instance, in setting up debt agreements, insolvency specialists and trustees may charge you exorbitant fees that you cannot afford, or they may set up a debt agreement that you cannot afford, which results in you not being able to meet the terms of your debt agreement. In other words, people can end up going bankrupt if they are bound by a poorly-suited debt agreement that they cannot afford.
Avoiding Bankruptcy Compliments of a Debt Agreement
To avoid bankruptcy caused by a debt agreement, the advice is quite plain and simple:
• Find a reputable trustee: A reputable trustee will work with your creditors, on your behalf to negotiate the debt down, which results in a debt agreement you can afford which will help you clear your debt.
• Avoid a debt agreement altogether: This can be done by finding a bad credit expert who will work with you to re-finance. This will result in re-payments that are easier to handle, which will ultimately help you reduce your debt.
• Honour the conditions of the debt agreement: Look at the debt agreement as an opportunity – not a punishment – to help you get out of debt. A good debt agreement will be affordable for you, so that over time, you will clear your debt and be financially secure.
For Further Information
Debt agreements and re-financing may sound to you like great ways to avoid bankruptcy, and this may well be the case for you. To determine for sure though, you need to consult with a bad credit specialist who will assess your situation and provide you with the guidance you need to own your own home and secure a financially independent future.
Call our team today and take the first step towards financial success!
Article Source: http://www.simplysearch4it.com/author-articles/10183/1.html
Do Bankruptcy Alternatives Work?
Bankruptcy should always be a last resort to debt relief and many people could avoid this with a few bankruptcy alternatives. Before you make the tough decision to declare personal bankruptcy, you may first want to think about a few bankruptcy alternatives.
Avoiding bankruptcy will not only save your credit rating but it allows you to recover from a bad credit history much quicker. Here are a few bankruptcy alternatives that provide financial relief that can get you out of your financial bind.
Get On A Budget
The first thing you should do before making any major decision is take a hard look at your financial situation. Write out a budget and include details on monthly household income versus monthly household expenses.
Understanding how you are spending your money may help you get a handle on your finances and avoid bankruptcy. You'll be able to see areas where you can decrease your spending, such as eliminating the premium channels from your cable TV or taking your lunches to work from home.
Negotiating With Creditors
What ever you do, don't hide from your creditors because it becomes worse. Most often your creditors can help you if you call them and explain that you're having trouble with your finances. If you explain that you are thinking about bankruptcy, they may be willing to give you an alternative payment plan to help you avoid bankruptcy.
If you already have a credit card with a low interest rate, you might consider transferring the balance from a high rate credit card to the lower rate one. You may also be able to negotiate a lower interest rate with credit card companies. Call your credit card company and ask them.
Some will probably say no but others may say yes and this can be a huge monthly savings for you. It's worth a call because even if a few say yes, it's a big help to your monthly budget. Small gains like this can add up to more than what you think and may even balance your monthly expenses.
Get a Debt Consolidation Loan
Other good bankruptcy alternatives might involve getting a debt consolidation loan to pay off your high interest credit cards. A debt consolidation loan lowers your monthly payments and this could be a great way to avoid bankruptcy.
Borrow Money From Savings
Depending on your situation, it may be an option for you to borrow against your IRA or 401k to pay off credit cards or debts that have a higher interest rate. Before borrowing against or using your savings, you should consider any penalties carefully so you'll know if this is a smart option for you.
Credit Assistance
Credit assistance programs may also be bankruptcy alternatives that may work to help you. Credit assistance organizations manage your unsecured debt through a debt management program to help you avoid bankruptcy.
Working through debt management programs, creditors may offer benefits that can help you with your unsecured debts, by lowering your monthly payments, reducing interest rates and eliminating late fees. Depending on your past credit history, creditors may even re-age your account and show it in a current status.
Make sure you look into bankruptcy alternatives before you make the decision to change your financial life forever. Look at these bankruptcy alternatives to consider if they may be a better choice for you.
Article Source: http://www.simplysearch4it.com/author-articles/10894/1.html
Avoiding bankruptcy will not only save your credit rating but it allows you to recover from a bad credit history much quicker. Here are a few bankruptcy alternatives that provide financial relief that can get you out of your financial bind.
Get On A Budget
The first thing you should do before making any major decision is take a hard look at your financial situation. Write out a budget and include details on monthly household income versus monthly household expenses.
Understanding how you are spending your money may help you get a handle on your finances and avoid bankruptcy. You'll be able to see areas where you can decrease your spending, such as eliminating the premium channels from your cable TV or taking your lunches to work from home.
Negotiating With Creditors
What ever you do, don't hide from your creditors because it becomes worse. Most often your creditors can help you if you call them and explain that you're having trouble with your finances. If you explain that you are thinking about bankruptcy, they may be willing to give you an alternative payment plan to help you avoid bankruptcy.
If you already have a credit card with a low interest rate, you might consider transferring the balance from a high rate credit card to the lower rate one. You may also be able to negotiate a lower interest rate with credit card companies. Call your credit card company and ask them.
Some will probably say no but others may say yes and this can be a huge monthly savings for you. It's worth a call because even if a few say yes, it's a big help to your monthly budget. Small gains like this can add up to more than what you think and may even balance your monthly expenses.
Get a Debt Consolidation Loan
Other good bankruptcy alternatives might involve getting a debt consolidation loan to pay off your high interest credit cards. A debt consolidation loan lowers your monthly payments and this could be a great way to avoid bankruptcy.
Borrow Money From Savings
Depending on your situation, it may be an option for you to borrow against your IRA or 401k to pay off credit cards or debts that have a higher interest rate. Before borrowing against or using your savings, you should consider any penalties carefully so you'll know if this is a smart option for you.
Credit Assistance
Credit assistance programs may also be bankruptcy alternatives that may work to help you. Credit assistance organizations manage your unsecured debt through a debt management program to help you avoid bankruptcy.
Working through debt management programs, creditors may offer benefits that can help you with your unsecured debts, by lowering your monthly payments, reducing interest rates and eliminating late fees. Depending on your past credit history, creditors may even re-age your account and show it in a current status.
Make sure you look into bankruptcy alternatives before you make the decision to change your financial life forever. Look at these bankruptcy alternatives to consider if they may be a better choice for you.
Article Source: http://www.simplysearch4it.com/author-articles/10894/1.html
Are You Allow To Keep Your Credit Cards In A Bankruptcy?
Many bankruptcy filers are wondering whether they are entitled to keep one or several credit cards for emergencies backup. In general, you may not because your credit cards will be cancelled regardless, since you file the bankruptcy. The credit card issuers tend to punish their card holders for filling any kind of bankruptcy; in most cases, the credit cards of bankruptcy filers will be terminated once they file for a bankruptcy. But there are some exemptions where terms and conditions will be applied to enable the bankruptcy filers to continue holding their credit cards.
There are some exceptions applicable only to chapter 7 bankruptcy filers. Some credit card's issuers will allow you to keep your credit card but with a sized down credit limit, and in return you need to repay them for some of your debts. In fact, some companies will automatically send you or your attorney a proposed reaffirmation agreement, a contract between you and your creditor that you will pay all or a portion of the money owed, despite the bankruptcy filing, in exchange for a minimal amount of new credit.
Beside the sized down credit limit, a chapter 7 bankruptcy filers may allow to keep their credit cards by some of their card issuers but the interest rate will be revised to a higher than the normal interest rate. But, if you can always pay your credit balance in full each month, you will never incur a finance charge, and the high interest rate won't hurt you.
Other than chapter 7 bankruptcy filers, all credit cards must be given up at the filling of bankruptcy. However, there are credit card holders who have maintained their credit cards at zero balance for a long period of time do not report their credit cards during the filing. This action can be considered illegal since in effect your preference on one creditor (your credit card issuer) over other creditors, because repayment ordination is a trustee job.
If you are not eligible to file under chapter 7 or even you are filling under chapter 7 but you didn't manage to get approval from your credit card issuers to keep your credit cards, the best thing is report all your credit cards and give them up. In most cases, your need to wait until the bankruptcy filing has cleared and then work with a debt management consultant to rebuilt your credit step by step. Of course, in the months and years after the bankruptcy filling, you may not be eligible for top-tier or even middle-tier credit cards.
But with some efforts and fiscal strategy such pay your monthly credit balance in full and on schedule will help you to rebuilt your good credit record and you can begin to erase the stigma of the bankruptcy; and eventually put you back in the realm of good to high credit score.
About the Author
Cornie Herring is the Author from http://www.StudyKiosk.com. "StudyKiosk-Credit Basics" is an informational website on credit basics, debt consolidation and bankruptcy. To see recommended bankruptcy attorneys, visit: Recommended Bankruptcy Attorneys.
There are some exceptions applicable only to chapter 7 bankruptcy filers. Some credit card's issuers will allow you to keep your credit card but with a sized down credit limit, and in return you need to repay them for some of your debts. In fact, some companies will automatically send you or your attorney a proposed reaffirmation agreement, a contract between you and your creditor that you will pay all or a portion of the money owed, despite the bankruptcy filing, in exchange for a minimal amount of new credit.
Beside the sized down credit limit, a chapter 7 bankruptcy filers may allow to keep their credit cards by some of their card issuers but the interest rate will be revised to a higher than the normal interest rate. But, if you can always pay your credit balance in full each month, you will never incur a finance charge, and the high interest rate won't hurt you.
Other than chapter 7 bankruptcy filers, all credit cards must be given up at the filling of bankruptcy. However, there are credit card holders who have maintained their credit cards at zero balance for a long period of time do not report their credit cards during the filing. This action can be considered illegal since in effect your preference on one creditor (your credit card issuer) over other creditors, because repayment ordination is a trustee job.
If you are not eligible to file under chapter 7 or even you are filling under chapter 7 but you didn't manage to get approval from your credit card issuers to keep your credit cards, the best thing is report all your credit cards and give them up. In most cases, your need to wait until the bankruptcy filing has cleared and then work with a debt management consultant to rebuilt your credit step by step. Of course, in the months and years after the bankruptcy filling, you may not be eligible for top-tier or even middle-tier credit cards.
But with some efforts and fiscal strategy such pay your monthly credit balance in full and on schedule will help you to rebuilt your good credit record and you can begin to erase the stigma of the bankruptcy; and eventually put you back in the realm of good to high credit score.
About the Author
Cornie Herring is the Author from http://www.StudyKiosk.com. "StudyKiosk-Credit Basics" is an informational website on credit basics, debt consolidation and bankruptcy. To see recommended bankruptcy attorneys, visit: Recommended Bankruptcy Attorneys.
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