Bankruptcy court filing
Remember the famous dramatist William Shakespeare (17th Century) who compared life to a drama and all the people in the world to be the actors in it. Hats off to his description, which holds good even 4 centuries after him. This is the truth that we are all artists acting to entertain the almighty ? God. Whoever entertains him the most, gets the best of his luck.
But for some reason like wrong financial planning, negative attitude or misfortune, they just don?t manage to make the both ends meet. Some still strive hard in the race while some try to cope the difference of necessities and income through loans, overdrafts etc., resulting in the extra burden of interest and repayment hardship. When this hardship waters go over and above the head, many people resort to only one step ? BANKRUPTCY.
Filing a Bankruptcy means a declaration by the individual that he has no income or his income is insufficient to satisfy all the loans he owes. If his plea is genuine and if the court finds truth in his request, it will declare him as Bankrupt. From that day, all his earlier debts are wiped off and he becomes debt free. Obviously, filing in court requires some legal knowledge, which a layman cannot have. So, there are attorneys and agencies, which help the victims.
The attorneys are rated by a national rating service and some attorneys also go further to get the recognition of ?Debt relief agency?.
The Chapter 7 deals with the basic Bankruptcy while the Chapter 13 deals with the wage earners plan. These Chapters have been laid out as guidance for those people who wish to attain financial relief. The Law of Bankruptcies was changed in 2005 owing to the influence of the credit card industry. There were basically two main changes:
The fees for filing Bankruptcy cases was earlier $299 is increased to an extra charge of $100 in the name of mandatory Bankruptcy debt education cost.
In addition to the above mandatory fees, hiring a legal professional would cost around $1500.
Although, it may sound problem relieving, it is not that easy. Many people just don?t give up. They fight till the end just not to become Bankrupting, as there is a matter of prestige entangled with this particular issue. Further, conscience does not allow many people to proceed in such matters. Their pals also show signs of regret that they have taken up such a step.
That is why they happily undergo the financial stress and depression, be whatever the reason like medical bills not covered by Insurance, losing job, losing overtime, changing jobs, moving across country, problems from a divorce, credit card overwhelming debt, but never take up Bankruptcy as a solution.
As far as Law is concerned, it just goes blind in these matters. When a person files a Bankruptcy case, it is in no way interested to know how much sacrifices the person has made before filing the case. It does not show any difference to the tough fighter or a simple quitter. It only checks if there are no claims from the creditors for fraud.
The procedure for filing Bankruptcy is as follows :
When a person unable to handle his financial burden, approaches an attorney, the attorney prepares the papers on which the client has to sign. The date of signing is regarded as the date of filing the papers and from that date, all the creditors seize the right to claim their dues. Within a few days of filing the papers, the court sends a notice of ?First meeting of the creditors? or the 341 Hearing. Only a trustee would be present and there would be no judge in this hearing. If the client passes through this hearing successfully, within months he will be declared debt free. Passing through this hearing successfully is quiet easy for people who earn less than the following income figures:
One earner / family - $2970/month ($35,678 per annum)
Two earners / family - $3,869/month ($46429 per annum)
Three earners / family - $4,219 / month ($51348 per annum)
Four earners / family - $4,848 / month ($58,187 per annum)
Five earners / family - $5,373 / month ($64487 per annum)
Six earners / family - $5,898 / month ($70,787 per annum)
Social Security Income does not count.
It is immaterial whether one person of the family or the whole family files the suite. The abovesaid requirements have to be met.
If the client owns a house under mortgage and his equity part (the difference of the house value and the mortgage value) is less than $100000, it will not be taken by the trustee for insolvency payment. Only the mortgage value has to be paid.
If the client owns a car of equity less than $5,000 ($10,000) in case of both husband and wife, it will not be considered and they can enjoy its ownership.
But properties shown as collateral securities for raising a loan will be seized for the repayment of the respective debt.
The trustee will not take income tax refunds of less than $500.
After being declared Bankrupt, the client has to ensure to get a copy of the credit report absolving him from all the previous credit accounts immediately. There are three credit bureaus in this field:
Equifax
Experian,
Transunion.
Bankruptcy means to ?start over? financially again. From then on, to improve his credit rating, the client has to ensure payment of bills on time and in case of problem for payment, consult the concerned creditor before the bill is due. He needs to maintain strong documented rental history by paying rent through cheques instead of cash and go in for verification of rent by the court if he plans to buy a new house. He can also apply for a secured credit card. He can so be a good entertainer to god from then on.
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