Friday, December 15th, 2017

Which Bankruptcy Kind Is Apt For You?

January 10, 2011 by drewloupsen  
Filed under Legal

Insolvency, in its inititial years, was devised for the benefit of lenders. This gave power to the creditor to confiscate all the assets of the borrower to compensate for his loss. This scheme not only left the borrower broke but also caused him to serving imprisonment. However, the system has been transformed a good deal over time. In present days, bankruptcy is normally filed by a debtor who acknowledges his inability to pay back his loans. This helps the debtor to conveniently re-organize his finances and attempt at partially repaying what he owes while continuing his business. The legislation that governs bankruptcy varies from country to country and even from state to state. For instance, in the US adheres to a Bankruptcy Code based on which there are six different kinds of bankruptcy called Chapters while Netherlands abides by the Dutch Bankruptcy Code. Again, Tampa Chapter 7, more commonly termed as straight bankruptcy, and Tampa Chapter 13, also known as Wage Earner Bankruptcy, may have legal implications that are different from those followed in other states of the US.

When an individual files for Straight Bankruptcy, he or she is required to give up all properties that are free from taxes and other liabilities. The trustee managing the bankruptcy takes the returns of these assets and divides 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 permits 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 go through 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 at times recommends Wage Earner Bankruptcy to the applicant. It is important to be advised by a competent bankruptcy attorney to find the best way to deal with this situation.

As is evident from the name, Wage Earner Bankruptcy is meant for those who have a steady flow of earnings. Under this type, the applicant is required to go for a repayment plan in which the applicant chooses to repay his debt with a portion of his income. Based on factors like income, expense, assets, etc., the repayment tenure can be anything between three years and five years. The tenure cannot cross the five years’ cap. In this case too the trustee plays an important role. All payments are made to the trustee who then hands over the money to 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 has the necessary experience and potential to handle your case. It is also essential that you maintain high amount of transparency with your advocate. Failing to comply could mean that you are committing strategic bankruptcy or even fraudulent bankruptcy, both of which can have nervous effects on your bankruptcy case.

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