Effects of Bankruptcy: You Must be Aware of Them Before Declaring Bankruptcy
Author: Jennifer Morva
Understanding bankruptcy
Bankruptcy is basically the official way of announcing that a person can no longer repay his debts in his current situation. Consequently, it is also a plan that allows the borrower to resolve his debts by dividing all his assets between his creditors. The process of dividing the said assets is duly supervised, all for the purpose of providing equal partition among creditors.
Because there are many different debt situations, there are also a number of different types of bankruptcy to help individuals and businesses get out of debt:
-Straight Bankruptcy requires a debtor to be within a certain asset limit or to give up property over that limit to be sold by the court. A person who successfully declares bankruptcy is able to get out of debt completely.
-Reorganization, is way for businesses or individuals with massive debts to get out of debt.
Pros of Bankruptcy
When declaring bankruptcy to get out of debt, you will not have to repay most or all of your debt.
Declaring bankruptcy could prevent foreclosure of your home, stop repossession of such items as automobiles, and keep your utilities from being disconnected.
Bankruptcy to get out of debt will often stop wage garnishments and phone calls from debt collectors and allow you to get out of debt without continued harassment.
Cons of Bankruptcy
When declaring bankruptcy to get out of debt, you will not be allowed to keep collateral owed to a creditor unless you can keep up with the payments. Declaring bankruptcy usually does not allow you to stop payment on such things as child support, student loans, alimony, court restitution orders, certain types of taxes, or criminal fines.
If you had consignors on any of your collateral, your cosigners will not be able to get out of debt with you as they are liable for part or all of the debt you discharge through a bankruptcy.
Declaring bankruptcy, in an attempt to get out of debt, will not eliminate your mortgage or any other secured loan; it will only keep these payments at bay until you have dealt with other creditors.
Article Source: http://www.articlesbase.com/loans-articles/effects-of-bankruptcy-you-must-be-aware-of-them-before-declaring-bankruptcy-404664.html
About the Author
Jennifer Morva has been associated with Bad Credit Personal Loans. Having completed his Masters in Finance from Lancaster University Management School, he undertook to provide useful advice through his articles that have been found very useful by the residents of the UK. To find iva free advice , iva for people with bankruptcy, bankruptcy information visit http://www.ivabankruptcy.co.uk
Where do I stand, I am a contractor and previous employer declared bankruptcy and demands money?
I am a independent contractor and my previous employer declared bankruptcy. They say that they made “preferential payments” to me and are demanding all money I received for services rendered up to 90 days prior to declaring bankruptcy. I have all invoices and my contract stating their intention to employ me and pay within 15 days of work performed. Where do I stand? Do I have to return all money they are demanding for the work that has already been done?
If your employer declares bankruptcy are the employees entitled to unemployment?
If your employer declares bankruptcy are the employees entitled to unemployment? If so what is the percentage of the salary will employees receive from unemployment? Can any one shed some light?
Are we supposed to get pending dues ,if employer declares bankruptcy?
Bankruptcy by an employer.?
My employer has declared a bankruptcy under chapter 11 and 15.
He owes salaries to all employees.Will we be able to recover our salaries?
My employer declared bankruptcy?
My employer owes me $6000 in salary. Because the company is in bankruptcy , will I get my salary owed me.
It is possible to be ordered to return money, but if it was in the ordinary course of business it is possible that you don’t have to. You need to consult a bankruptcy attorney. If you do not have an order from the bankruptcy court telling you to do this, then hold off and see what an attorney can help you do to keep the money.
Unemployment is paid out of a state fund, which receives it’s dollars from taxes that employers pay into with each payroll they pay.
So it does not matter that your former employer has declared bankruptcy. The employer may own this fund some money, but that will not be an issue to you.
It depends who is “we”
When a business declares bankruptcy there is an order in which people are paid. When the money runs out, everyone below that on the list gets screwed.
I’m not an expert, but I believe employee wages come first, then outstanding bills like suppliers who are owed money for products that have been delivered. Next is bond holders (people who made loans to the company). Stock holders are last in line since they are basically the owners of the company. Usually if a company declares bankruptcy the stock holders get nothing since, if there was money left after all the other bills were paid, the company wouldn’t have been bankrupt.
So the answer to your question depends on what group of people (employees, vendors, bond holders etc) you mean by “WE” and it depends on what the dues are for. That determines where you are on the list of people to be paid. The amount of assets the company has will determine whether or not they pay far enough down their list to get to you.
If you are a regular W-2 employee, file a wage claim with your state Department of Labor. It will pay you and will file a claim in the employer’s bankruptcy case to recover what it paid out .
If you are a contractor, you will need to file a claim in the company’s bankruptcy case. If you know the case has already been filed, contact the bankruptcy court clerk and request the information you need as a creditor to file a claim… if you haven’t already received that in the mail from the bankruptcy court.