Personal bankruptcy occurs when a person is not able to pay off his debts and has more liabilities than assets. There can be different types of filing personal bankruptcy. The most common filing bankruptcy is under chapter 7. Of all the personal bankruptcy filings, approximately 1.5 million were reported in 2009 just according to data from the US Bankruptcy Case onset database.
Chapter 7 is the type of filing that involves the liquidation of assets to pay off the creditors. If you are filing bankruptcy under chapter 7, there is a possibility that some of the non-exempt assets will be liquidated to pay off some of the debt. Other assets can be classified under various types of asset protection.
Chapter 7 will allow the case to be completed without a discharge. When the case is completed, the petitioner has no duty to repay the debts that he or she has incurred, generally speaking.
However, the person must have tried on a voluntary basis or the creditors may seek a repayment program that is normally part of the bankruptcy proceeding as part of the plan. However, not all the creditors may agree to it even though it is part of the plan. Then there is an allowance for some of the debts that cannot be discharged. The debtor makes a financial plan in accordance with his earnings and expenses. After that plan is approved by the court, the creditors are not entitled to them. The creditors under chapter 7 are not permitted to bring any legal action while the debtor is still within the scope of the bankruptcy program.
When you file for bankruptcy under chapter 7, it will not affect your profession and you are entitled to continue with your present employment. Moreover, you can be a qualified candidate by your professional tests even though the case is still pending.
The bankruptcy is a seven-year ordeal and you stand to be discharged from your case after your completion of almost three years. The bankruptcy will also prevent other creditors to chase you for debt.
When you file a case under chapter 7, or 7 concern, the main advantage is that your property is liquidated and the proceeds are distributed to the creditors. After the sale of your property, the creditors are told to make payment in proportion to the value of the remaining property by either liquidating the property or by taking a course of legal action. In place of filing under chapter 7, you can choose under 11 that has paid almost all the creditors of the debt. Under 11 is often referred to as “no-asset” bankruptcy. This type provides you with several alternatives to choose from as long as they are qualified. Your 3-year repayment program will begin only after you have paid all the creditors as well as provide the full repayment of all the debts.
While filing for bankruptcy under 11, you can payback for the payment of the creditors based on what your fund can pay considering your priority and all your assets that it owns. If the value of assets is greater than the value of your priority claims, you are given a repayment plan for more than the time. However, you will be discharged from your repayment program only if you achieve the full payback for your debts as scheduled in the repayment plan. If your assets are equal to or greater than the large value of your priority claims, you may be asked to pay the principal out of your own funds based on a plan that was devised based on your income.
However, is bankruptcy for you is an alternative that you may also consider. Bankruptcy is a decision of disgrace. You are susceptible to having your name appear in the paper as a bankrupt. The cases are public records. In case you see your name in the paper when it is not you, you are compelled to put it on the public record. A record of bankruptcy will make you ineligible to apply for any more public contracts or government assistance. Chapter 11 will allow you to rebuild your business and keep your business operating successfully after your bankruptcy. Chapter 11 allows you to rebuild your assets and slowly hand over profits to pay off creditors. If you apply for Chapter 11 and are accepted, the court may appoint an official monitor to ensure that the company is making profits. It allows your company to make profits slowly without having to pay off creditors. Whether you choose Chapter 11 or Chapter 7 bankruptcy, you can be discharged from your bankruptcy when your assets equal to the amount as determined by the court.