Bankruptcy Information: Know The Facts Before Filing Bankruptcy
Author: Simon Volkov
Obtaining accurate bankruptcy information is crucial in order to determine if filing personal or business bankruptcy is the best option. In 2005, significant changes were made to the United States Bankruptcy Code through the enactment of the Bankruptcy Abuse Prevention and Consumer Protection Act. In order to comply with BAPCPA regulations, petitioners should retain the service of a qualified bankruptcy lawyer.
An important piece of bankruptcy information is that BAPCPA requires all petitioners to undergo the ‘means’ test. This financial tool compares debtor’s income with their state’s median income level. Using mathematical calculations, the means test determines how much debt must be repaid.
In most cases, debtors are required to file Chapter 13 bankruptcy and establish a repayment plan. In the past, many debtors petitioned the court seeking Chapter 7 bankruptcy protection. Chapter 7 requires debtors to liquidate assets to repay debts. Any outstanding balances are dismissed and the debtor has the opportunity to make a fresh financial start.
With bankruptcy chapter 13, debtors are required to repay a portion of their debts over an extended period of time. Generally, Chapter 13 payments extend for three to five years and can cause serious financial hardship; particularly if job loss or unexpected emergencies arise.
During the repayment period, debtors must pay a large amount of disposable income toward repayment of debts. If debtors miss a payment, creditors can petition the court and seek dismissal.
In certain situations, the bankruptcy Trustee can negotiate with creditors if extenuating circumstances occurred causing the debtor to fail out of bankruptcy. If the problem is temporary, creditors generally give debtors a second chance. However, debtors who become repeat offenders don’t receive much sympathy.
When debtors fail out of bankruptcy they lose all protection from the court. Creditors can move forward with collection actions, including foreclosure. It is important to note that if a person files bankruptcy to save their home from foreclosure and later fails out of bankruptcy, foreclosure proceedings will commence where they left off. In some cases, foreclosure can occur within as little as three days.
During Chapter 13 repayment, debtors must do whatever it takes to stay on track. Otherwise, they will lose court protection, and will likely lose their home and all money invested in it. For this reason alone, all bankruptcy alternatives should be explored before making a final decision.
Alternatives to bankruptcy include debt settlement, debt consolidation, budgeting and credit counseling. It is important to research all available options and understand the pros and cons of each.
One of the most accurate sources of bankruptcy information is the Department of Justice, U.S. Trustee Program website. The DOJ presents thorough information on both personal and business bankruptcy, and includes an entire section on BAPCPA rules and regulations. A list of approved credit counseling agencies is also available at the U.S. Trustee website.
Article Source: http://www.articlesbase.com/personal-finance-articles/bankruptcy-information-know-the-facts-before-filing-bankruptcy-1880654.html
About the Author
Simon Volkov is a private real estate investor who specializes in buying and selling foreclosure, bankruptcy and probate real estate. Simon has published numerous bankruptcy information articles via his website and throughout the online community. If you are facing bankruptcy or foreclosure and need to sell your home quickly, visit www.SimonVolkov.com today.
