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How Can Bankruptcy Be An Advantage To A Creditor

Can Your Request For Bankruptcy Be Denied

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Petitions for personal bankruptcies are not denied often but under some circumstances they can be. Whether a bankruptcy is approved depends on how much income is made compared to how much debt you are in. A potential reason for denying a debtorâs bankruptcy is lying about how much certain assets cost or how much income the debtor made in the year. If the debtor attempts to hide financial assets and records, and this is discovered, their bankruptcy may be denied. The motivation behind filing for bankruptcy is to be completely honest about oneâs financial status, and the necessity of creating a clean slate, financially.

Bankruptcies may also be denied for technical reasons, unrelated to the honesty of the debtor filing. For example, if paperwork work is not timely or is otherwise filed incorrectly, or other conditions for filing a bankruptcy are not met, the bankruptcy petition may be thrown out.

It is also possible for the court to convert the debtorâs type, or âChapter,â or bankruptcy, to one that is deemed more suitable to the debtorâs circumstances.

For the reasons expressed above, It is best to be completely honest about your financial situation, and handle handle all technical aspects of the proceedings correctly in order to make a bankruptcy petition worth it. If done correctly, a successfully filed bankruptcy can be a great decision to help get your life back on track.

If The Judgment Is A Lien

If the judgment has been reduced to a lien, the situation gets more complicated. The judgment will be treated as a secured debt in bankruptcy. A secured debt is a debt that is attached to property as collateral. This means that the creditor retains the right to repossess the property as repayment for the unpaid balance of the loan in question. Remember however, that your lien can be avoided if it impairs your ability to take full advantage of an exemption, like the homestead exemption. You will need to file a separate motion to avoid the lien against the lien holder. If there is not enough home equity remaining after the mortgage is paid, to pay both the judgment lien and the exemption, the lien will impair the homestead exemption and can be avoided under both Chapter 7 and Chapter 13 actions. It will be important to record the court order avoiding lien with recorderâs office so thereâs no question in the future whether the lien is still in effect

Advantages Of Filing Bankruptcy

Relief From Creditors and Debt If creditors are hounding you with phone calls and letters to demand payment, your filing for bankruptcy will force them to stop. Filing bankruptcy either discharges your debts or restructures them into a new payment plan thats easier to cover. Either method can help you achieve a more manageable financial position.

Protection for Your Personal Assets Bankruptcy laws shield some of your personal assets, like your retirement savings and personal residence. That way, creditors are limited to what they can take as you settle your case.

A Chance to Start Over Filing bankruptcy can give you a second chance. With restructuring, you can keep running your business but on better credit terms. On the other hand, with Chapter 7, you can wind down a company that just isnt working anymore so you can move onto something else.

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Being Discharged From Bankruptcy

When a debtor receives a discharge order, they are no longer legally required to pay the debts specified in the order. What’s more, any creditor listed on the discharge order cannot legally undertake any type of collection activity against the debtor once the discharge order is in force.

However, not all debts qualify to be discharged. Some of these include tax claims, anything that was not listed by the debtor, child support or alimony payments, personal injury debts, and debts to the government. In addition, any secured creditor can still enforce a lien against property owned by the debtor, provided that the lien is still valid.

Debtors do not necessarily have the right to a discharge. When a petition for bankruptcy has been filed in court, creditors receive a notice and can object if they choose to do so. If they do, they will need to file a complaint in court before the deadline. This leads to the filing of an adversary proceeding to recover money owed or enforce a lien.

The discharge from Chapter 7 is usually granted about four months after the debtor files to petition for bankruptcy. For any other type of bankruptcy, the discharge can occur when it becomes practical.

How Does Debt Settlement Differ From Bankruptcy

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Debt settlement is a process in which you negotiate with your creditors to pay a reduced amount. To explore debt settlement, you need to have an income stream that will enable you to repay your creditors. Most creditors will only accept a settlement if the borrower can show they can afford it. If an agreement is reached, the remaining balance of the loan should be forgiven.

Unlike bankruptcy, you cannot force your creditors to accept less. A debt settlement only occurs if the creditor agrees to the proposal. Essentially, the creditor holds all the cards in debt settlements. Usually, the most considerable risk to the creditor will be the borrower filing bankruptcy. If bankruptcy is filed, the creditorâs power may be limited or non-existent.

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Disadvantages Of Personal Bankruptcy

One of the main disadvantages of bankruptcy is its effect on a persons credit score. A bankruptcy can stay on a persons credit report for up to ten years, which may makes it temporarily more difficult to make major purchases.

However, bankruptcy is often only one factor creditors consider when deciding whether to grant credit. Today bankruptcy is more common than in previous years, and creditors are frequently willing to disregard a bankruptcy filing from several years ago.

In addition, bankruptcy cannot eliminate all types of debt, and therefore may not be the right solution for everyone. For example, secured debts, student loans and tax debts are often not dischargeable in bankruptcy.

An individual considering filing for bankruptcy can benefit from speaking with an experienced bankruptcy attorney. The attorney can tell you whether bankruptcy is right for your situation, prepare your bankruptcy petition and set you on the path towards achieving your future financial goals.

What Only Chapter 13 Bankruptcy Can Do

Chapter 7 and 13 each offer unique solutions to debt problems. The two bankruptcy types work very differently. For instance, how quickly your debt will get wiped out will depend on the chapter you file:

  • Chapter 7 bankruptcy. This chapter takes an average of three to four months to complete. Learn more about erasing your debt in Chapter 7 bankruptcy.
  • Chapter 13 bankruptcy. If you file for Chapter 13 rather than Chapter 7, you’ll likely have to pay back some portion of your unsecured debts through a three- to five-year repayment plan. However, any unsecured debt balance that remains after completing your repayment plan will be discharged. Find out how to pay off or discharge your debts in Chapter 13 bankruptcy.

Chapter 7 is primarily for low-income filers, and therefore, it won’t help you keep property if you’re behind on payments. But, if you have enough income to pay at least something to creditors, then you’ll be able to take advantage of the additional benefits offered by Chapter 13.

Here are some of the things that Chapter 13 can do.

Stop a mortgage foreclosure. Filing for Chapter 13 bankruptcy will stop a foreclosure and force the lender to accept a plan that will allow you to make up the missed payments over time. To make this plan work, you must demonstrate that you have enough income to pay back payments and remain current on future payments. Learn more about your home and mortgage in Chapter 13 bankruptcy.

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Consulta A 5 Star Bankruptcy Attorney In Tampa With Free Consultations

We invite you to contact Florida Law Advisers, P.A. to schedule a free consultation with a bankruptcy attorney at our firm. We will take the time to review your financial situation to see if bankruptcy is the best option to help you get out of debt. At Florida Law Advisers, P.A., we understand that filing for bankruptcy can be a very confusing and intimidating process. That is why we work so hard to make the process as easy as possible for our clients.

Our Tampa bankruptcy attorneys have years of experience helping people solve their financial problems and obtain a fresh start. Regardless, whether you need help with Chapter 13, Chapter 7, or other forms of debt relief, our professional legal team can help. Call 800 990 7763 to speak with a bankruptcy attorney at our firm today.

Not All Debts Are Discharged

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For some, theres just no escaping all of it. Certain debts will remain on your account when you file for Chapter 7 bankruptcy. You will still be responsible for alimony and child support. Tax liens, student loans, and personal injury debts caused by intoxicated drivers are still on the docket, as well.

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Stop A Foreclosure Repossession Or Eviction

The automatic stay will stop these actions as long as theyre still pending. Once complete, bankruptcy wont help.

  • Evictions. An eviction thats still in the litigation process will come to a halt after a bankruptcy filing. But the stay will likely be temporary. Keep in mind that if your landlord already has an eviction judgment against you, bankruptcy wont help in the majority of states. Learn more about evictions and the automatic stay.
  • Foreclosure and repossession. Although the automatic stay will stop a foreclosure or repossession, filing for Chapter 7 wont help you keep the property. If you cant bring the account current, youll lose the house or car once the stay lifts. By contrast, Chapter 13 has a mechanism that will allow you to catch up on past payments so you can keep the asset. Find out more about bankruptcys automatic stay and foreclosure and car repossession and bankruptcy.

What Are The Disadvantages Of Bankruptcy

Bankrupts will lose most of their assets and access to credit for at least a year. Their home may be sold . Furthermore, during the bankruptcy period, they will face certain restrictions including not being allowed to:

  • borrow more than £500 without informing the lender of their bankruptcy status. Failure to inform a lender could be breaking the law. In Scotland, they cannot borrow more than £2,000 without informing the lender of their bankruptcy status

  • act as a director of a company

  • create, manage or promote a company

  • manage a business with a different name

  • work as an insolvency practitioner

  • act as a Member of Parliament, as a member of any local council, a Justice of the Peace or a member of a school board in Scotland only

Although most debts will be written off once the bankruptcy has been discharged, monthly payments required as part of an Income Payments Agreement may need to be made for up to three years following bankruptcy .

In Scotland, if you are assessed as having enough money, you will have to pay contributions towards your debt for four years.

Further, in Scotland, if you obtain new property or money within four years of declaring bankruptcy, it may be claimed by the bankruptcy trustee.

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How Is A Consumer Proposal Different From Bankruptcy

If an individual is insolvent and has a combined debt of at least $1,000 to their unsecured creditors , he or she may qualify to file either a consumer proposal or bankruptcy. Being insolvent simply means not being able to meet monthly financial obligations, such as paying bills to creditors.

Whereas anyone in this debt situation could file for bankruptcy, a consumer proposal is suitable to a more specific situation: one in which the debtor has a reliable income from which they can make regular monthly payments during the term of the proposal usually for five years.

The amount of this payment will be determined using the information you provide to a Licensed Insolvency Trustee about your income, expenses, debts and assets. Most debtors find that making this one payment every month is far easier than the multiple payments they have been juggling to satisfy their creditors.

More differences between a consumer proposal and bankruptcy are outlined below.

Advantages Of Personal Bankruptcy

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The main advantage of bankruptcy is that it offers individuals a chance to start over financially. Most people who file for bankruptcy will be able to get most types of debt completely discharged.

Filing bankruptcy also prevents creditor harassment. An automatic stay is immediately imposed upon filing for bankruptcy to give debtors necessary time to review their current financial situation. This forbids creditors from continuing any collection efforts, and therefore stops or delays foreclosures and evictions, utility turn-offs and wage garnishments. Creditors who attempt to collect debts after an automatic stay is imposed face strict consequences. They may potentially be charged with contempt of court or found liable for damages.

A Chapter 7 bankruptcy offers elimination of all unsecured debts. These are debts for which the debtor has not pledged any property as collateral. Secured debts are debts for which a debtor pledged a specific item of property as collateral, such as a mortgage or car loan. Secured debts can usually not be discharged in bankruptcy. Bankruptcy also usually allows people to keep their property.

Although a bankruptcy does not eliminate secured debts on property, liens can often be discharged or reduced if they are greater than the property value. A Chapter 13 bankruptcy may also give people the ability to catch up on delinquent mortgage payments, allowing individuals to retain their property.

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How Much Does It Cost To File For Bankruptcy

The base contribution fee to file bankruptcy in Canada is $1,800 for a first-time bankrupt. This pays for the trustees time, filing fees, and counselling fees.

Your specific bankruptcy costs are determined by the assets you own and your income.

  • You are required to surrender or buy back any assets that are not exempt from seizure by the trustee
  • You may be required to make additional surplus income payments if your income is over the government-set threshold
  • You will lose any tax refunds up to and including the year you filed

Top Mistakes To Avoid When Filing A Proof Of Claim

As mentioned above, it is recommended to hire an experienced bankruptcy attorney to best represent your bankruptcy claim and help you file a Proof of Claim accurately, to completion, and in a timely manner. This is especially true for complex claims and when a Creditor is seeking substantial restitution in monetary value. The utmost care and attention to detail should be taken when filling out a Proof of Claim form and submitting it within the bankruptcy claims timeframe. In fact, fraudulent claims are subject to a fine of up to $500,000, imprisonment for up to 5 years, or both.

The most common mistake made is incorrectly confusing the Debtor and Creditor fields on the form. The Debtor is the corporation or entity that has filed for Chapter 11 bankruptcy, while the Creditor is the person or business entity that is entitled to a payment or equitable remedy arising from events that occurred before the Petition date.

It is also critical that the individual completing the Proof of Claim signs and dates the Official Form B410. An original signature is mandatory for Proofs of Claim that are mailed physically. For filing an electronic Proof of Claim, courts are authorized to consider electronic signatures as valid. A Creditors signature declares under penalty of perjury that the details provided on the Proof of Claim form are true, and accurate to the best of their knowledge and belief.

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Can I Get A Credit Card If I Declare Bankruptcy In Canada

No. Once you file for bankruptcy, you must hand over your credit cards to your trustee so they can be cancelled. Additionally, your credit rating will be negatively affected by your bankruptcy and Canadian credit bureaus will keep a note about your bankruptcy on your credit report for up to 7 years, depending on your province.

Disadvantages Of Filing Bankruptcy

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Damage to Your Credit Score When you declare bankruptcy, your credit score takes a serious hit and can fall by over 200 points. In addition, the bankruptcy shows up on your credit report for between 7 to 10 years. While there are bad credit small business loans, its still much easier to borrow when you have a strong credit score.

The damage to your credit score can make it significantly more difficult to take out a credit card, a mortgage or any other type of loan in the future, both for your business and yourself.

Can Be a Lengthy, Expensive Process It takes several months to complete the Chapter 7 court process and possibly even longer for Chapter 11 and 13. Youre going to be spending time in court, negotiating with creditors and coming up with a plan. You also need to pay for court costs and an attorney, which can add up to thousands of dollars.

Broken Vendor Relationships Your vendors are also fighting to keep their businesses alive. When you declare bankruptcy, they end up taking a serious loss themselves. Consider reaching out to vendors you have a good relationship with. They may be willing to settle for a smaller amount now so they dont have to wait on the bankruptcy filing. By extending this courtesy, you make it more likely the vendor will work with you again.

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