Debt is never a great idea but sometimes, it becomes inevitable. When the interest mounts up with debt, there looks to be no way forward. If we consume more debt than we can repay, it becomes a crushing situation. U.S Bankruptcy code is certainly the last hope that can save your boat from drowning. This code has been set up to protect honest and hardworking people from a vicious cycle of debt. The code sets free businesses or individuals by releasing the debt/liability after educating them and by following a legal process of settling as much debt as possible. If you are unable to determine if you should file for bankruptcy or you shouldn’t, consider visiting Recovery Law Group to clarify all your questions about bankruptcy and how to make the right decision.
Broad reasons for bankruptcy
The reasons for bankruptcy can be many. Some are forced while others are just reckless financial management and indecision. Forced reasons could include medical costs, sudden loss of a job, pay cut, divorce, business failure, etc. While the financial reckless or indecision includes spending or buying luxury items from a credit card or pay day loans. Spending excessively or availing more loans beyond the ability to sponsor the EMI with the paycheck. Unplanned retirement can also be one of the reasons where you find out your expenses are way higher than the social security benefits and savings.
Businesses have different sets of reasons. These can be classified into two types. Internal reasons could be equipment failure, change in management, poor planning/forecasting, inefficiency, lack of investment, etc. External reasons are usually uncontrollable reasons like fluctuation in the currency market, government policies, increased taxes, increase in competitors, etc.
Basics of Bankruptcy Chapters
Bankruptcy can be filed across different chapters. There are different thresholds, eligibility criterions, advantages/disadvantages of each Chapter. There is no perfect way of determining which Chapter is best as it varies on a case to case basis. For an individual Chapter 7 might be appropriate while for the other person, Chapter 13 might be a better alternative. To seek the best solution on what suits you or your business, reach out to some of the best attorneys in town at 888-297-6203 now!
• Chapter 7
Chapter 7 is a bankruptcy code which is available for qualifying individuals as well as businesses. This is also referred to as a liquidation Chapter because it is all about liquidating the assets to pay out the debts on the basis of priority. The court has exemptions and other regulations that allow it to classify exempt and nonexempt assets. The nonexempt assets are auctioned, sold, or disposed by the bankruptcy trustee on behalf of the creditor. The common misconception about Chapter 7 bankruptcy California code is that a business or the person might lose all assets when filing Chapter 7 bankruptcy. However, it isn’t true. Using various exemptions and other settlement alternatives, businesses or individuals can safeguard their non-luxury assets.
• Chapter 11
Chapter 11 is similar to Chapter 13 but is available for businesses as well. It is pre-dominantly used by corporates and businesses. But it can be used by individuals who have many complex transactions and do not qualify for Chapter 13. The fee for Chapter 11 is slightly higher and it deals with putting forward a plan to settle the debts in the near future. On the basis of the proposed plan, the debt is restructured.
• Chapter 13
Chapter 13 is a future-oriented payment plan that has certain debt type thresholds for eligibility. It is a plan that focuses on debt settlement based on the disposable income available for the filer in the future 3-5 years. This ideal for home mortgage bankruptcy filers and other filers who had like to retain most of their assets.
Still confused on what you should do, which Chapter, is bankruptcy ideal for me, if yes when now or later? These are some common questions that keep revolving in a financial crisis situation. Seek professional help and let them take over all your troubles and concerns. Dial in 888-297-6203 now for the right answer!