The word “bankruptcy” is often linked to someone who lives pay check to pay check. However, it can occur to business owners. Dan LA Bert, executive director of the National Association of Consumer Bankruptcy Attorneys, explained that Bankruptcy gives “the opportunity for a new start ” and can be an option for debt relief regardless of where someone is.”https://youtu.be/Iiw69x7tBCM
What happens when you decide to file for Bankruptcy? This page will explain the procedure, offering the options to individuals and details to aid in the understanding of Bankruptcy.
BANKRUPTCY Vs INSOLVENCY
1. “Bankruptcy” is a legal process that involves the business or person who cannot pay the outstanding debts.
2. The bankruptcy process starts with a petition filed by the debtor or by creditors.
3. The debtor’s assets are analyzed and weighed, after which the assets are used to pay back a portion of outstanding debt.
4. In the lucid language in lucid language, if a person or entity is not able to pay back the debts it owes its creditors on the date, or when they become due, then the person or entity is considered to be “insolvent”.
5. “Liquidation” refers to the winding-up of an organization or corporation. There are a variety of entities that may start proceedings that eventually lead to Liquidation.
Cost of Bankruptcy
Even if your finances are in a bad state, filing for Bankruptcy could be costly. Amount of cash. Hiring a bankruptcy lawyer could cost you a few thousands of dollars.
If you decide to submit your bankruptcy case, the filing costs on their own are high, and your odds of success are significantly reduced.
As per the National Bankruptcy Forum, the median cost of a Chapter 7 bankruptcy is $1,250.
Bankruptcy is listed on Your Credit Report.
Chapter 7 bankruptcies will be listed visibly on credit reports for ten years. Chapter 13 bankruptcies will remain on your credit report for seven years.
Education in Bankruptcy
In every bankruptcy filing, it is a mandatory educational procedure.
As per the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, consumers must go through credit counselling before filing 180 days before declaring Bankruptcy. The counselling offers information on the process as well as alternative debt-relief options.
Following filing, the consumer must complete them before the discharge course (mandatory to get your debts forgiven) regarding the personal management of finances. It is designed to help avoid additional and future financial problems. It’s designed to provide structure to manage your finances by making the budget, keeping it up to date, and utilizing credit responsibly.
Do I need to declare Bankruptcy?
There’s a reason that Bankruptcy is referred to as”the “nuclear option” to help with debt. It is only an option if you have attempted – but failed – to pay off your debt through other options for debt relief.
If this is the case, take a look at your pros and cons before clicking the button.
Pros and Cons of Bankruptcy
- Eliminates or reduces debts for those in a financial crisis, possibly due to an illness or loss of job.
- Temporarily, creditors are prohibited from foreclosing on a house or repossessing a vehicle.
- Temporarily stops wage garnishment or harassment by debt collectors or disconnecting utilities.
- Gives the consumer a “second chance” in their financial situation.
Pros and Cons of Bankruptcy
- Credit history can be affected, lasting up to 10 years which can cause difficulties when obtaining credit for loans for homes, vehicles, and cars.
- It becomes a public record that could be reviewed by prospective employers and bankers, insurance firms, and other lenders.
- It can be very difficult to obtain a mortgage after Bankruptcy. You might not be eligible for loans over a long period, particularly mortgage and home equity. If you get loans with interest rates, they will be higher due to the risk.
What is the Judgement Provenance?
A person with judgment proof whose income is not enough to pay off debts with the creditor and whose assets are safe from Litigation under federal law.
Someone may have valuable assets – Social Security, Disability, retirement accounts, ERISA Pensions, Veteran’s benefits, worker’s compensation as well as public assistance, the child’s support system and Alimony; however, these are protected under federal law, and therefore are as proof of a judgment.
The money from these resources is utilized to pay for daily expenses like rent and utility bills and food, clothing, etc. Taking that money away to pay debts may cause a person to be without a home and struggle to live. This is why they’re protected.