There typically exist two types of bankruptcy proceedings. A liquidation by filing a Chapter 7. Which is the most common type of bankruptcy. This involves an appointment of a trustee, to handle a sort of escrow. Taking non-exempt property, selling it and distributing it to creditors.
Chapters 11, 12, 13 include the rehabilitation of the debtor, to allow them to use future earnings to pay off creditors.
The biggest factor of a bankruptcy is that once filed, creditors, mostly, can't seek debt collection outside of the bankruptcy proceedings.
The passage of the "Bankruptcy Prevention & Consumer Protection Act", done in April 2005, changed the game a little. Outlining modified guidelines governing dismissal or conversion of Chapter 7, 11, and 13 proceedings.
No one wants to have to file for bankruptcty, but in some cases it's your only protection. However, that protection is not what it used to be. Before you make any kind of bankruptcy decision, you need to know all the facts. So, take a moment to read about the Act.
"Bankruptcy Prevention & Consumer Protection Act"
Also, if you feel that you need to file for bankruptcy because of debtors. You need to know that there is a statue of limitations for debts in each state. If the statue has passed, then you can no longer be hounded for the debt.
However, if you pay, even a small "good faith" amount of money to the creditors, the payment will reset the statue calendar and be back at square one. Also, you must be careful dealing with a online payday loan company. They will have access to your bank account. They can and will take any payments they want and you will have no recourse, aside from the goodwill of the cash advance company.
Find out more about what debt collection agencies can do here: Debt Collection Agencies - How to Deal with them.
Check the state limitations here: Debt Collectors - Statute of Limitations by Every State
For privacy rights information, go to: Privacy Rights
For more financial advice, go to:
3 comments:
Nice post, Very informative!
I'd like to think that there are a lot of people out there that applied for a bankruptcy due to an unavoidable situation like a bad divorce, being terminated/fired and not being able to recover or the expense of having long term illness. In these cases you would think that most creditors would be happy to work with a customer but they arent and filing a bankruptcy can be the one way to protect yourself and your family.
Bankruptcy is never an easy decision and should be the last resort to serious financial issues. I suspect that due to the current state of our economy and the ongoing mortgage crisis that there will be even more bankruptcies than in previous years.
Post a Comment