Filing for Bankruptcy

Bankruptcy Explained?

•    Bankruptcy is a financial program that is administered through the United States government in adherence to the federal bankruptcy code. Bankruptcy enables an individual or business entity, stricken by insurmountable doubts, with the ability to restructure their debt obligations through liquidation or through the development of a repayment plan.

•    Bankruptcy filings offera debtor to alleviation through an alternative payment plan or the assets obtained from liquidation.
•    Individuals and business entities who file bankruptcy do so to free themselves or alleviate themselves from the constraints of creditors, who perpetually seek repayment. Through the inclusion of a government agency, those individuals and entities struggling with debts can reorganize their debts through incremental payments.
•    The most popular forms of Bankruptcy are: Chapter 7, a Chapter 11 filing, and a Chapter 13 filing. A Chapter 7 filing will immediately resolve debts through liquidation—the individual or entity’s assets are sold and the proceeds from the liquidation are used to pay off the debts owed. A Chapter 11 filing is typically initiated by a business entity that is struggling with sales or earning a profit. A Chapter 11 filing enables the business to maintain its operation (through the appointment of a trustee) while developing repayment plans that are aligned with the company’s expected profits. Lastly, a Chapter 13 Bankruptcy claim enables an individual or business entity to restructure their payment plan through the delivery of incremental pay periods. The incremental schedule is developed based on the debtor’s income, their living expenses and the various amounts owed to the underlying creditors.

Filing for Bankruptcy

•    Before filing for bankruptcy, the entity or individual in debt must first contact a bankruptcy attorney.
•    To find an experienced bankruptcy lawyer the filing party should contact their local or state bar associations for referrals.
•    Once the attorney has been chosen, the filing party must gather all pertinent financial document, including:  outstanding bills, paycheck stubs, bank statements, car loans, tax returns, and copies of any mortgages from the most recent six months.  Once these documents are gathered they must be sent to the underlying bankruptcy attorney.
•    Bankruptcy paperwork (known as a petition) requires that the debtor list every debt owed. Failure to include every debt will result in a termination of the bankruptcy filing.
•    To fortify a legal and exacting inclusion of all debts it is necessary to undergo an evaluation of all listed secured versus unsecured debts.
•    Secured debts refer to those assets (cars or mortgages) where creditors may hold a security interest in the property. If the debtor does not fulfill the obligations of their debt, the creditor may claim these assets. In contrast, unsecured debts refer to debts not secured by property, such as medical bills or credit cards.After review of all information, determine which type of Bankruptcy to file for.
•    Once all pertinent information has been gathered, the filing party must sign off that all the enclosed information is accurate. From this point, the attorney will file the case with the bankruptcy court that oversees the underlying party’s  particular district.