Obtaining Answers For Bankruptcy Questions
There are pros and cons of filing for bankruptcy protection. This is why before commencing any action, it is important for a debtor to obtain answers to all his bankruptcy questions. Competent bankruptcy lawyers and bankruptcy websites are effective means of knowing more about bankruptcy questions and proceedings, its requirements and implications.
There are many types of bankruptcies and the most common of which are Chapter 7 bankruptcy and Chapter 14 bankruptcy. Most bankruptcy questions dwell on the technical requirements and consequences for both bankruptcy types. It is crucial that before filing any action, the debtor is able to determine which among the two he should file for. When a debtor files for Chapter 7, he surrenders all his non-exempt assets to a bankruptcy trustee. It is the responsibility of the latter to liquidate or sell these properties. Proceeds from these assets are then distributed to all affected creditors. Usually, the debtors who file for Chapter 7 no longer have assets that he may stand to lose. All dischargeable debts may be settled within four months.
Aside from Chapter 7, many bankruptcy questions are also about Chapter 13 bankruptcy. This type of bankruptcy is also referred to as reorganization bankruptcy. The individuals who file for this type of bankruptcy usually use future earnings to be able to pay off creditors. This bankruptcy protection is applicable for those who have non-exempt properties that they still want to keep. This is also chosen by debtors who are expecting regular income in next three to five years. A bankruptcy trustee determines if this income is sufficient enough to cover for the day-to-day expenses and debts of an individual. Other bankruptcy questions or issues may also be answered or resolved by the assigned bankruptcy trustee. Individuals who have filed for bankruptcy protection can expect that their creditors will no longer be making attempts to collect debt payment once bankruptcy documents are filed. As stipulated under the law, a creditor can no longer initiate or continue lawsuits, or make telephone calls demanding payments if a debtor already commenced bankruptcy proceedings. In addition, filing for Chapter 7 or Chapter 13 bankruptcy will also lead to reduction of taxes and elimination of penalties and fees. Tax obligations may also be deferred or made payable within a longer time frame. To validate the bankruptcy petition, there should not be transfer of properties made on certain assets within a year from the application. Moreover, the same condition applies during and after the bankruptcy proceedings. From studies made on US bankruptcies, it was determined that the most common reasons for filing of Chapter 7 and Chapter 13 are unemployment, overextended credit, marital problems and large medical expenses. In fact, approximately half of all personal bankruptcies filed are due to illness and hospitalization expenses.
Despite the benefits of bankruptcy protection, it is important for any individual to consider it as a last resort due to lasting consequences. This may affect the ability of the individual to obtain credit in the future and may seriously affect his chances for employment or promotion. Before initiating a bankruptcy petition, consult a financial expert or a competent bankruptcy lawyer to answer all relevant bankruptcy questions.
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