Bankruptcy - Legal Implications

In the present complex world of Finance and Industry, bankruptcy is one of the most commonplace terms that are closely associated with insolvent companies. The term "Bankruptcy" is essentially used for large corporate houses, small business ventures or even individuals having outstanding loans accruing over a period of time including an equally very high interest that are legitimately to be paid to creditors over a stipulated period. Bankruptcy can easily be depicted as a legal proceeding in a court of law where the assets of the debtor are liquidated in order to provide a relief to the debtor from any further liability to their creditors and to arrange payment of debts from the limited resources of the debtor.

Causes of Bankruptcy

There are a large number of companies picking up huge loans at higher rates of interest from companies offering loans, creditors or financial institutions with a view to expand their business potential. In the present day scenario, it is a normal practice that it is not only the companies that take up loans, rather individuals also approach financial institutions for personal loans. The inability of these large companies to repay their loans results in the company becoming bankruptcy or insolvent. One of the major factors that often result in bankruptcy is the grim economic situation of the country and the impending recession.

Bankruptcy Laws

The repercussions of these laws on the company or an individual are extremely strenuous. Once the creditors become aware about the insolvency of the company, they file a legal suit against the debtor claiming repayment of their loans by the debtor. One of the first steps of the laws of bankruptcy is that the assets of the debtor are liquidated to pay off the creditors.

Professional Assistance

In a normal situation, a company files for bankruptcy prior to declaring themselves bankrupt due to insurmountable loan amounts that have accrued along with the interest. It is always in the interest of the debtor that he consults a legal practitioner and seeks his assistance on the prevalent laws of bankruptcy or obtains appropriate credit counseling from an organization approved by the government at least six months prior to applying for filing for a bankruptcy protection in a designated court of law.

There is no dearth of solicitors and lawyers around the country who offer their professional services to help a bankrupt company to tide over their financial crisis. These professional attorneys assist their clients in working out their loans and helping them with the settlement of their outstanding debts in an orderly manner, thereby securing their clients' financial future and consolidating their financial resources. However, it would be prudent for people who are plagued with debts to check on the credentials and reliability of the attorneys filing their petition before entrusting them with the assignment since this work involves a lot of secrecy and confidential information being handed over the attorneys.

Colorado Chapter 7 Bankruptcy

There are cases in which solutions seem not to exist, but hope should always be by your side, as along with a good lawyer, you can figure out how to get out of the situation. There are a lot to consider and in some cases, Colorado Chapter 13 is better than Colorado Chapter 7. In case you want to get hold of your property, no matter if it is situated in Colorado or not and you are behind with the mortgage, then Chapter 17 is the most suitable choice in case of bankruptcy. There are also financial reasons that should be taken into consideration, as each of them have their own advantages and disadvantages.

On the other hand, people who want to get over everything and who don’t want to pay the mortgage in order to redeem the property, Colorado Chapter 7 is the best alternative. Let’s go through the basic aspects, review them and afterwards, you will be able to decide what is best for you. First of all, the advantages of Chapter 7 are worth mentioning, especially the fact that a new fresh start can be obtained. The only debts that remain after the bankruptcy has been discharged are the secured assets that are mentioned in the agreement from the first place. It is definitely good news for those who don’t want to get involved in a long-term commitment.

More than that, with Colorado Chapter 7, the creditor’s will be off your back, as protection is guaranteed. In a few months, depending on the case and on the lawyer chosen, the case is over and there is no minimum debt imposed. And now for the disadvantages; the non-exempt property is lost by the owners, as it is sold by the trustee. It can be a car, a house or anything major, so this might not be the best choice for everyone. Also, if there are any co-signers of the loan, they will also be stuck with the debt, but they have the option to file for bankruptcy protection.

The advantages and disadvantages of Colorado Chapter 13 are related to the payment plan. As for the advantages, if the payment plan can be afforded, there is no asset lost, regardless if it is non-exempt or exempt. Protection against creditors is assured in this case as well. Colorado Chapter 13 can be filled at any time, unlike Colorado Chapter 7, where it can be filled only once at six years. There is more time allowed for paying debts that are unable to be discharged no matter the chapter, including child support, taxes and so on. Here as well, in case of Colorado Chapter 13, there are disadvantages to take into account.

The legal fees are generally higher, as the process is more complex. The court process of bankruptcy takes longer to succeed, up to 5 years, therefore the plan and the debts will last longer. The payment plan is created according to the post bankruptcy income, which means you will tie up the cash over the entire plan period of Chapter 13. There are certain people who cannot file the Chapter 13 bankruptcy process, including commodity brokers and stockbrokers.

Get the Facts Before You File Chapter 7 Bankruptcy

There are two most common forms; Chapter 7 and Chapter 13. Each has its own set of advantages and disadvantages. In this article you'll learn what Chapter 7 bankruptcy is and find out if filing for one is your best course of action.

What Chapter 7 of the U.S. Bankruptcy Code Covers

Chapter 7 or "straight bankruptcy" is generally what people mean when they think about bankruptcy. Put simply, Chapter 7 reduces your debt if you, the debtor, surrender a part of your property. During the proceedings, all assets not protected against creditors will be liquidated. There's no repayment plan involved since you'll no longer be responsible for any remaining debt not covered by the sale your assets. Your debt is "wiped clean," which means you'll have to start your life from scratch after losing possessions.

What happens in practice, though, is far different from what the law intends. About 96 percent of personal bankruptcies are no-asset cases. No property is liquidated is taken away from a debtor either because it's exempted or low-value.

Who Can Qualify for a Chapter 7

Debtors who file for this type of bankruptcy should first consult with a Chapter 7 bankruptcy lawyer. That's because you have prove you're earning more than the state-specific median income in order to qualify. A lot of debtors have passed the new Means Test. The hardest part, however, is in gathering the information required to qualify. Working with a Chapter 7 lawyer can definitely speed up the process.

Those deep in debt may want to try qualifying. An article at CNN Money describes this form of personal bankruptcy as "the best option for consumers saddled with insurmountable debt."

What to Watch Out for When Filing

Filing for bankruptcy is one of the biggest decisions that can either revive or ruin your finances. Credit counseling agencies and lawyers that can financially benefit from your position may slow down the process or may put you at a disadvantage. Talking to someone who has gone through this can give you a glimpse of the process.

Learn from their experience and talk it through with your partner and anyone who may be affected by the bankruptcy filing.

As always, consulting with a Chapter 7 bankruptcy lawyer can save you from unexpected legal consequences. A good lawyer can even point you to alternative solutions or actions to take before filing for a bankruptcy.

Tips for Finding the Perfect Bankruptcy Attorney

Filing for bankruptcy can be a daunting process, but it doesn't have to be one that you face alone. Trusting the expertise of a bankruptcy attorney can help you navigate legal complications and avoid common pitfalls. By allowing an attorney to guide you through the process, you're making your filing for bankruptcy efforts easier and more likely to succeed. Regardless of whether you apply for a Chapter 7 or Chapter 13 bankruptcy, it's usually in your best interest to seek advice from an attorney.

The Right Choice

However, there are many options available and it can be difficult to find the perfect bankruptcy attorney for your situation. Finding one that meshes with you personally and has the experience needed to successfully guide the case can be a challenge. Since a bankruptcy attorney can come with considerable fees, it's crucial to find one that you like and trust before hiring him.

To find the perfect bankruptcy lawyer, consider:

•Asking friends and family members. Yes, Google exists - and for good reason! But the referrals and recommendations from your family and friends should be trusted and can offer good connections that can help you in your case.

•Seeking a specialist. Don't just seek any lawyer. Bankruptcy attorneys have proven expertise in the bankruptcy process and law. They can help you as you're filing for bankruptcy and can also give you advice as you recover financially.

•Contacting your state bar association. If your family, friends, and internet searches don't leave you with any stand-out leads, consider contacting your state bar association to ask for lawyer referral services. You can find reviews and complaints about attorneys.

•Taking advantage of the free consultation. Most bankruptcy attorneys offer free consultation to talk about your case. Instead of completing this over the phone, try to see the attorney in-person. You'll be able to feel the personal connection as well as determine whether or not you trust him. This also gives you a glimpse of what it will be like to work with this particular lawyer, and you can compare him to other bankruptcy attorneys that you've visited and considered.

•Referrals from other lawyers, bankruptcy court. If you've used a lawyer for anything else, feel free to contact him for a bankruptcy attorney referral. Most professionals are well connected within their industry and can give you insight as to whom to trust. A bankruptcy court could be a great place to seek information as well.

Once you consider all of these tips to find a good bankruptcy attorney for your case, filing for bankruptcy will be easier than you thought possible! A bankruptcy attorney will help you complete all of the necessary paperwork as you're filing for bankruptcy as well as represent your case with specialized skills.

Benefits of Filing for Chapter 7 Bankruptcy

For individuals in the bankruptcy process, it comes down to two choices: Chapter 7 or Chapter 13. While both have their own benefits that are alluring to various situations, Chapter 7 is the most common form of bankruptcy in the United States - and for good reason! The advantages of bankruptcy are both immediate and long-term, making people happier despite their difficult financial situations.

Advantages of Filing for Chapter 7

Chapter 7 bankruptcies are known for canceling more individual debts. They give individuals the opportunity for a fresh financial start without having to worry about how they'll payback creditors. The process to apply and discharge debts usually takes 3-4 months and can be done with the help of a bankruptcy attorney. While we often hear negative things about filing for bankruptcy, opting for 7 has been known to provide many benefits including

1. Convenience. Because filing for a Chapter 7 bankruptcy only takes a few months, it is a fraction of the time that it takes to file for a Chapter 13. In fact, some 13 cases have lasted as long as five years! This shorter process is a convenience that allows you to get back on track much more quickly.

2. Protecting future income. Under 7, your future income is protected and isn't part of the bankruptcy process. However, because debts and repayments are restructured under Chapter 13, your future earnings are still going to be used to pay the bills. Your disposable isn't yours anymore.

3. Cost-efficiency. Filing for bankruptcy with Chapter 7 is much cheaper than a Chapter 13 filing. Even when using a bankruptcy attorney, the legal fees for Chapter 7 are noticeably less.

4. A faster fresh start. While all bankruptcies are designed to give you a fresh start, a Chapter 7 filing has more immediate benefits. Some individuals see their credit scores improving in as little as a year since their debts were discharged under 7. Furthermore, you can qualify for a home loan within 2 years. Yes, both Chapters hurt your credit, but the consequences for Chapter 13 don't evaporate as quickly.

5. Protected assets. Most people are worried about their assets when filing for bankruptcy. In a Chapter 13, you will retain possession of your assets. In Chapter 7, that isn't a guarantee, which worries many individuals. However, statistics show than many people do not lose anything - or anything significant - as a result of Chapter 7.

6. Freedom. After filing for bankruptcy, you face both emotional and financial freedom. Once the debts are discharged, you no longer have to worry about harassing phone calls and the emotional stress of what's next. Instead, you can focus your energies on rebuilding your financial health.

7. Eliminated repossession and foreclosure debts. A Chapter 7 can wipe out these loan decencies and other unsecured debt that qualify.

Chapter 7 Attorney: Moving Past Bankruptcy

While it can be difficult to make the decision to hire a Chapter 7 attorney and move forward with bankruptcy filings, it is sometimes the only decision to make. What can be even more difficult, of course, is moving back from the brink. There are no two ways about it: filing for bankruptcy is not a great thing for your financial records. The repercussions to your credit report are serious and unavoidable. It will take several years for you to rebuild that credit, but it can be done. Your first steps will involve finding a new outlook on financial responsibility. Here are some of the ways you can move past this unfortunate period and beyond bankruptcy.

Emergency Funds

If you find a Chapter 7 attorney who is willing to provide you with advice on the future as he is helping your through the process, he may recommend starting an emergency fund. One of the easiest ways for an individual to get in trouble with credit cards is when an emergency pops up. The car breaks down, for instance, or medical bills suddenly demand your attention. After bankruptcy, you may not have a credit card to rely on anymore, so you need to make sure you have the money to take care of these incidents as they occur. Vow to put away a certain amount of money each month for just such an eventuality.

Budget

Any Chapter 7 attorney you talk to will tell you that most people have little idea how much they spend in relation to how much they bring in. They probably think they know, but unless you sit down and make a budget, you are walking a tightrope without a net. This is especially true once you have no credit cards on which to rely. Make your budget. Figure out exactly how much income you're bringing in and then write out your expenses. You may realize quickly that you either aren't bringing in enough or you are spending too much. If this becomes apparent, you'll need to fix something on one side of the equation. It's usually easier to cut expenses than it is to increase your income.

Rebuild Your Credit

A lot of people make the mistake of thinking that since bankruptcy is erased from your credit report in seven years, they will be eligible for a loan in exactly that time. That's not always the case. You still have a large gap in your credit history that banks will not look on favorably. Try to close that gap. Apply for a secured credit card and begin rebuilding your credit history in the meantime.

Chapter 7 Liquidation Bankruptcy Vs Chapter 13 Reorganization Bankruptcy

Chapter 7 Liquidation Bankruptcy

Chapter 7 is named 'Liquidation Bankruptcy' because a trustee is appointed to collect and reduce to money any non-exempt assets for the benefit of priority and unsecured creditors of the estate.

Over 90% of all Consumer Chapter 7 filings are declared 'non-asset cases' because few consumers filing Chapter 7 have assets that exceed any amount that can be protected. Chapter 7 is the simplest, quickest, least expensive and easiest way to discharge 'unsecured' debt.

Debt owed to 'secured creditors' are generally discharged but the secured creditors contractual rights to their 'security' usually remains unaffected. So they must be financially satisfied to prevent them from pursuing their rights to the security after the bankruptcy case is concluded... usually 3 to 5 months after the case was filed.

While Chapter 7 discharges most all General Unsecured obligations, it does not discharge: most tax obligations, debts owed as a result of a Domestic Support Obligation, Student Loans, Fines and some other less common obligations.

It should be understood that in order to receive the benefits of a Chapter 7 bankruptcy the law now requires anyone earning more than their States Median Income to prove they're unable to repay at least 25% of, or $10,000 to, their General Unsecured Creditors over a 5 year period ($167 monthly). However, some skilled bankruptcy attorneys have been able to successfully challenge the 'systems' presumptive position in that regard which has allowed some of their over Median Income clients to still receive the benefits of a Chapter 7 discharge.

You should also understand that it's not unusual for someone to file Chapter 13 and actually pay less per month or even pay less in total to their creditors than what they would have paid had they filed a Chapter 7.

Because Chapter 7 may not be available or because that availability may need to be skillfully challenged and because a Chapter 13 may be more advantageous, it's important to have your financial affairs reviewed by, and for you to be represented by, a consumer bankruptcy specialist highly skilled with Chapter 7 and Chapter 13 matters.

Chapter 13 Reorganization Bankruptcy

Chapter 13 bankruptcy restructures and discharges debt based on a consumers ability to repay over a period of at least 36 months and usually 60 months. Most Chapter 13 Plans primarily call for the repayment of secured and priority creditors and leave little, if anything, available to pay unsecured creditors. It's not unusual for a person filing Chapter 13 to pay less per month and or pay less in total to their creditors than they would have, had they filed a Chapter 7 Liquidation Bankruptcy.

That's because Chapter 7 doesn't have much effect on Secured and Priority creditors while Chapter 13 can restructure those creditors which have a shorter repayment period remaining than the length of the proposed Chapter 13 Plan. This 'restructuring' can modify the rights and status of secured and priority creditors.

As an example the filing of a Chapter 13 can remove a totally unsecured junior (2nd or 3rd) mortgage from their secured position on the real estate and treat it as they truly are... "unsecured". Chapter 13 also can stop foreclosures and design a Plan to cure the mortgage delinquency over the life of the Plan... without allowing future interest on the delinquent amount.

Chapter 13 also stops future interest on outstanding priority tax obligations and can provide up-to 5 years to repay those taxes. It can also reduce interest rates on consumer secured obligations like vehicle contracts when they're in excess of the current prime rate of interest plus 2 or 3 percent.

In some instances, depending on when the debt was made, vehicle contracts and other contracts secured by consumer goods can be treated as partially secured and partially unsecured when the value of the security is worth less than what's owed.

These features are generally not available to someone filing Chapter 7 bankruptcy.

While Chapter 13 can often be more advantageous than a Chapter 7 you must be careful to find and select an attorney willing to file and able to skillfully file, Chapter 13's. Not all bankruptcy attorneys will file them and some of those who do, don't provide the level of expertise needed to take the greatest advantage of the special provisions available.