Finance Agreements

A state of bankruptcy exists when a business or individual can no longer afford to pay their debts and or employees.

Chapter 7 is available to individuals, sole traders, partnerships and corporations, and is often the favoured chapter to file bankruptcy under, as once the bankruptcy is discharged, the individual or legal entity is no longer liable for any outstanding debt.

Chapter 7 is not without its disadvantages though. Although chapter 7 removes virtually all debt, (there are some exceptions, tax, alimony payments and student loans being examples of debt that cannot be discharged), it also leaves the debtor with nothing, as all personal possessions have to be sold to make payment to the creditors.

Despite its popularity, chapter 7 is not an option for some debtors, in that a means test has to be completed before chapter 7 filing is approved. This was introduced in 2005 to prevent fraud.

The means test was introduced to ensure that any debtor applying for chapter 7 genuinely cannot afford to repay their unsecured debt. If it is found that their income is such that they can make repayment, albeit with a rearranged repayment schedule, they will not be allowed to file chapter 7, but chapter 13 instead.

With that in mind, there are other alternatives to be considered.

First off, think about whether or not you really do need to claim bankruptcy at all? It can look like a simple option, and look very appealing when one is struggling to make ends meet, but the consequences are serious.

Creditors may fear that if one of their customers files for bankruptcy that they will get little or nothing and have to write off the debtor’s debts. The debtor should always seek a repayment holiday first, which may have some appeal to the creditors as delayed payment is better than no payment at all.

If a creditor is open to a revised payment schedule, then combine this with a debt counseling service to help formally arrange things. What you have then done is basically the same as a chapter 13 bankruptcy, but without the bankruptcy!

Chapter 11 is suited for businesses. If a case under chapter 7 has been dismissed, then that means that the court feels that the company has sufficient income to repay at least part of it’s debts. Chapter 11 allows the company to continue trading, thus generating income, whilst at the same time repaying its creditors by way of an agreed and enforced repayment schedule.

It could be that due to these harsh financial times you could be considering declaring yourself bankrupt. If you would like more free information about declaring yourself bankrupt, visit www.declaringyourselfbankrupt.net.

It helps to have a plan. In life. In business. In relationships. Plans are good things. So to, in Chapter 13 bankruptcy, having a plan is not only a good idea, it’s the law!

My clients hire me as their Orlando bankruptcy lawyer to create a Chapter 13 plan payment that meets their financial goals. A Chapter 13 plan lasts between 36 to 60 months and can be used to catch up a mortgage payment, wipe out a second mortgage completely, eliminate credit card debt, pay off a car loan, or take out IRS debt.

In a Chapter 13 bankruptcy, the person filing the case (Debtor) files a payment plan at the beginning of the case. This plan addresses what goals the Debtor wants to accomplish during the term of the plan. It also serves as guidance to creditors as to how they are going to be treated in the plan. Finally, it provides instruction to the Chapter 13 Trustee regarding who she is to pay and how much she is to pay each creditor.

The Debtor has several options to choose from when creating a chapter 13 plan. Too often in Court I see folks try to develop a plan with no idea how to express what they want to do in the plan in a way that can be understood by anyone. The result is that the plan gets objected to, or the Debtor’s case gets dismissed by the Trustee. This is bad because then the Debtor has filed bankruptcy and got nothing from it.

If you want a good result from your Chapter 13 case, hiring an experienced Orlando bankruptcy lawyer is a great place to start. In almost all of my cases, so long as my client keeps up with the Trustee payment during the plan, my client will never see the inside of the Bankruptcy Court. Even better, my clients will have met all of the goals they wanted to achieve when their case was filed.

Having a plan is important, especially in Chapter 13 cases. Having a plan that successfully navigates you through the case and relieves you from overwhelming debt is even better.

Looking for help with filing Chapter 13 bankruptcy, then visit www.khuntergoffpa.com to find the best Orlando bankruptcy lawyer for you.