All You Need To Know About Bankruptcy

Bankruptcy is the state where one legally declares, the incapability of either himself, or his business to settle outstanding debts, to his creditors. However, you cannot wake up one morning and decide to declare yourself bankrupt; there are certain criterion which will be looked into, by the court to determine if you qualify to be declared bankrupt or not.
Normally, there are four parties involved in any kind of bankruptcy proceedings, and they are;

• The creditors-either a firm, or an individual who is owed money.

• The debtor-the one filling for the case.

• The trustee-the trustee is appointed by the court, to act as a link between the creditors and the debtor, and is made in charge of the debtor’s assets and is allowed by court to sell any assets in order to settle the outstanding debts.

• Judge-who is in charge of the case, and presides over any matter in relation to the case.

Basically, there are two types with which, an individual can file to be declared bankrupt, and they are;

1. Liquidation. With this, you must be prepared to give up all assets that you cannot protect by jurisdiction’s insolvency. However, there are requirements, which you must fulfill first.
• You must fill and complete a petition with the court.

• You must meet the income requirements and ability to prove your incapability of settling the debts.

• Payment of the bankruptcy attorney fees. The fee ranges between $500-$2500, depending in which state you are in. However, the fee might be higher if your case is complex in nature.

• Payment of the court’s filling fee of $299.

• Must attend a trustee supervised meeting, with the creditors, a month after you have filled your case.

• Must accept to undergo credit counseling with an approved agency.

• You cannot apply for liquidation if you have not finished 8 years, from your former insolvency filling.
2. The second one is known as reorganization. The reasons for filling this case are many. And they include, stopping the IRS in the process of consolidating your debts into once a month reasonable payment, and preventing your home from foreclosure. Like liquidation, there are some requirements to be fulfilled.
• Must pay a filling fee of $ 274.

• Payment of bankruptcy attorney fee. It ranges from $1500-$3500 but can be higher, depending on the intricate nature of your case. The charges will vary, depending on the state you are in.

• You must meet the monthly income requirements to qualify for reorganization.

• Must accept to undergo credit counseling with an approved agency.

• Must file and complete a court petition.

However, before resorting to filling for insolvency, it is important to ask the bankruptcy attorney, some bankruptcy questions. This will help you have a clear understanding of what you are getting yourself into. In addition, there are some debts which are not discharged, even after you have been declared bankrupt. Student loans, alimony, child support, fines imposed by the government, liabilities accruing as a result of drunken driving, are some of the indispensable debts.

As much as you will have to give up some of your assets, there are certain exemptions that the laws allow you to retain. Things like your personal house, home goods and private possessions, your automobile, life insurance, and tools you use in carrying out your business activity, to name but just a few.

Although you will be relieved of the debts, there are certain disadvantages that come along when you file for insolvency.
• Since it is a public record, the filling will remain in your credit history for up to ten years. Therefore, affecting your credit worthiness.

• It may not be possible for you to run for public office.

• And finally, the state of your finances will no longer be a private matter, rather public because, you will be subject to public examination on your financial affairs.