bankruptcy is a process, the Federal Court, which helps companies and individuals to repay their debts to the investigation and under the protection of the bankruptcy court has ordered some. There are basically two types: liquidation and reorganization.

Liquidation bankruptcy chapter 7 of the Bankruptcy Code, which happens when you make a court the right to freedom from your debts. Some of your properties will then be liquidated or sold back by the bankruptcy court to be shared by those among your creditors. This type of bankruptcy four minutes six months ago, which is quite fast and only one appearance at the courthouse is necessary. It is very convenient and does not require payments stretched over time.

Chapter 7 of the Bankruptcy Code is not accessible to all, however. You can not benefit if, within six to eight years, you received a bankruptcy discharge. Similarly, if after reviewing your income, expenses and total debt, it was found that another type of bankruptcy is most appropriate, you can not insist on the implementation of this kind. Veterans from now, people with disabilities and their debts when their active duty almost automatic access to the file. In addition, people whose debts are caused by management of a company are well qualified. For those not belonging to one of these categories, certain criteria must be met.

The criteria has been imposed by the new bankruptcy rules is concerned. One of the considerations is your current monthly income, which in turn be compared with the median income for a family of similar size in your state. This is not your income at the time of your request. Instead, it is your average income over the last six months before filing. Social security benefits system, such as retirement and disability benefits not included in the calculation. If your income seems to be sufficient to support the other type of bankruptcy in spite of allowable costs and payments for a dependent child income tax liabilities, and others, the bankruptcy liquidation is not allowed .

Many people, when given a choice, given that such reimbursement of part of the debt rather useless. You lose part of your property, but some courts allow some room for maneuver that does nothing to start something with you later.

On the other hand, the bankruptcy reorganization, usually under Chapter 13, which happens when you file a bankruptcy court a plan on how you intend to pay your debts. You specify how much each will receive from your creditors, depending on your finances. This is one of three or repayment plan for five years, after which you, your debts are discharged, if there at all. Sometimes, however, due to obvious financial difficulties, the Court itself decides to discharge earlier than expected and that’s what usually happens.

An additional condition for the two types of bankruptcy is to complete the credit counseling conducted by an organization recognized by the Bureau and the U.S. trustee. This allows you to examine closely the situation in hand and determine if bankruptcy is very important. This allows you several ways of informal repayment which you have been neglected in the past to see. Although this is obviously impossible, counseling remains an important criterion. In addition, the completion of the post-counseling is required after the procedure. This will teach financial management to avoid the same situation encountered in the future. The bankruptcy discharge will not be released unless they are not met.

Bankruptcy can be used for the debtor and creditors an advantage. It’s a way to recognize his own responsibility and mistakes that led to financial difficulties. The entire process takes into account the interests of both parties and led to the development of a plan of action, where they met. As such, this right must not be abused by a debtor to believe that the court intervene.

Bankruptcy, although generally advantageous, must be considered as a last resort. You must in all cases, work hard to avoid the full control of your finances, which has alienated trouble. Discipline is indeed a very important property that must be maintained at all times.

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