Counter Your Debt Distress With Bankruptcy
Bankruptcy, in its nascent stage, was formulated for the benefit of creditors. This gave power to the creditor to confiscate all the assets of the debtor to compensate for his loss. This method not only left the debtor broke but also entailed him to serving imprisonment. However, the mechanism has changed a good deal over time. In modern times, bankruptcy is normally filed by a debtor who acknowledges his inability to repay his loans. This helps the debtor to conveniently re-organize his finances and attempt at partially paying off what he owes while continuing his business. The legislation that governs bankruptcy differs from country to country and even from state to state. For instance, in the US follows a Bankruptcy Code according to which there are six different types of bankruptcy called Chapters while Netherlands follows the Dutch Bankruptcy Code. Again, Tampa Chapter 7, popularly termed as straight bankruptcy, and Tampa Chapter 13, also known as Wage Earner Bankruptcy, may have laws that are different from those followed in other states of the US.
When a person files for Straight Bankruptcy, he or she is required to give up all assets that are free from taxes and other liabilities. The trustee handling the bankruptcy takes the returns of these assets and splits it among the creditors. In this way the debtor is relieved of a portion of or the whole loan amount, as may be applicable for the proceeds derived from the surrendered assets. The US bankruptcy laws allow a citizen to file for this type of bankruptcy only once in every eight years. Post the amendment made in the year 2005, the applicant must also undergo a test to find out whether he or she is eligible to file for this bankruptcy. Inability to pass this test leads to the rejection of the bankruptcy application and sometimes recommends Wage Earner Bankruptcy to the applicant. It is important to be advised by an efficient bankruptcy attorney to find the best way to deal with this situation.
As the name suggests, Wage Earner Bankruptcy is meant for those who have a steady flow of income. Under this type, the debtor is required to opt for a repayment plan wherein the applicant chooses to repay his debt with part of his income. Depending on factors like income, expenditure, assets, etc., the repayment tenure can be anything between three years and five years. The tenure cannot cross the five years’ limit. In this case too the trustee plays an important role. All payments are made to the trustee who then pays the creditors involved. Again, in case of the debtor’s failure to pay, legal proceedings will act upon the trustee’s motion.
As is evident, it is essential to hire a bankruptcy lawyer or attorney who posses the necessary expertise and efficiency to handle your case. It is also important that you maintain high amount of transparency with your lawyer. Failing to comply could mean that you are committing strategic bankruptcy or even bankruptcy fraud, both of which can have adverse effects on your bankruptcy case.