Which Bankruptcy Kind Is Apt For You?
Bankruptcy, in its inititial years, was devised for the benefit of lenders. This gave power to the creditor to confiscate all the property of the debtor to compensate for his loss. This method not only left the debtor penniless but also caused him to serving imprisonment. However, the system has changed a good deal over time. In present days, bankruptcy is generally filed by a lender who admits 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 carrying on with his business. The legal norm that governs bankruptcy varies from country to country as well as from state to state. For instance, in the US adheres to a Bankruptcy Code according to which there are six different types of bankruptcy known as Chapters while Netherlands abides by the Dutch Bankruptcy Code. Again, Tampa Chapter 7, popularly called 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 assets 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 sum, as may be applicable for the proceeds derived from the surrendered possession. The US bankruptcy laws allow a citizen to file for this type of bankruptcy just once in every eight years. Post the amendment made in the year 2005, the person applying must also undergo a test to find out whether he or she is qualified 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 an efficient bankruptcy attorney for finding the best way to deal with this insolvency.
As is evident from the name, Wage Earner Bankruptcy is aimed at those who have a steady flow of income. Under this type, the debtor is required to opt 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 go beyond the five years’ limit. In this case too the trustee plays an important role. Debtors pay the trustee who then pays the creditors involved. Again, in case of the debtor’s failure to make the payment, legal proceedings will act upon the trustee’s motion.
As is evident, it is essential to hire a bankruptcy lawyer or attorney who possesses the necessary expertise and efficiency to handle your case. It is also important that you maintain great transparency with your advocate. Failing to adhere could mean that you are committing strategic bankruptcy or even bankruptcy fraud, both of which can have nervous effects on your bankruptcy case.
