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What Are The Consequences Of Filing Bankruptcy

Benefits Of Filing Bankruptcy

Are There Any Tax Consequences When Filing Bankruptcy? – Bankruptcy Questions Answered 2021

The stress, sleepless nights and arguments at home over money and the worry about receiving collection calls even at work and the fear of a wage garnishee all disappear.

This is due, in large part because of the Stay of Proceedings that goes into effect as soon as the bankruptcy is filed.

The Stay of Proceedings stops unsecured creditors from taking steps to collect on their debt.

Collection calls stop.

Wage Garnishees in place or contemplated also are stopped.

Your Trustee May Sell Your Assets

You are able to keep:

  • ordinary household goods
  • tools up to a set amount used to earn an income and
  • vehicle with a value up to a set amount.

Your trustee can sell other assets including your house and property. You must not dispose of any property belonging to the trustee. You must declare any assets you have when you apply for bankruptcy and any you receive during bankruptcy.

Myth #: Personal Bankruptcy Will Ruin Your Family

Lots of things lead to family problems, but bankruptcy may actually offer a solution to some of your problems. You may be on the brink of divorce because of your financial crisis. Our Firm sees this a lot. In some cases, you can put a stop to the family problem by filing for bankruptcy and getting a fresh, financial start.

Although filing for bankruptcy can be a very difficult decision in your life, the absence of all this stress may give your relationship a fighting chance.

Need more information about bankruptcy? Please at 281-888-5581. The road to financial freedom starts here.

Get Answers. Get Help.

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Your Debts Are Eliminated

Thats right, your debts are gone which is the ultimate objective of declaring bankruptcy.

NOTE: Not all debts are eliminated. If you owe child support or alimony, or court fines, those obligations survive your bankruptcy. Secured debts, such as the mortgage on your house, or a car loan, also dont go away, provided you decide to keep your house or car and continue paying your secured loan.

All other unsecured debts are eliminated, including credit cards, bank loan, payday loans, and even income taxes owed to Canada Revenue Agency.

So even though bankruptcy requires you to complete your duties, for most people eliminating their debts and not having to worry about legal action or a wage garnishment is worth it.

To find out more about eliminating your debts, please contact a licensed bankruptcy trustee for a no charge initial consultation.

A Quick History Of Bankruptcy

The Consequences of Filing For Bankruptcy  Dave Collyer

The term bankruptcy probably came from the Italian phrase banca rottawhich literally means broken benchbecause in medieval days, if a merchant couldnt pay their creditors, they could come break the merchants market stall .1

What about bankruptcy in America, specifically? Well, several different bankruptcy acts popped up during times of economic crisis before the Bankruptcy Act of 1898. This one said bankruptcy didnt require the creditors approval and stuck around until the Bankruptcy Reform Act of 1978which set the laws we follow today.

Now when you file for bankruptcy, no ones coming to smash your bench , but its still a painful experience.

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Will Retail Bankruptcies Drop In 2019

Debtwire’s chief retail analyst Philip Emma told Retail Dive in an earlier interview that the number of bankruptcies will decrease in 2019 simply because so many have already fallen. They will slow down if, for no other reason, many of the loyal retailers like Toys R Us, BonTon and of course Sears have already filed for bankruptcy.

Can Your Request For Bankruptcy Be Denied

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.

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Myth #: Filing Bankruptcy Is Very Difficult And Could Result In An Audit

Not in most cases. Filing bankruptcy is much easier than in the past. While the law requires various forms to be filled out and submitted to the court, much of this work is done electronically thanks to electronic filing.

In most cases, we simply need an intake form completed, values for your property, bank statements for 3 months, tax returns for 2 years, paystubs for 6 months and a list of your debts. Our Firm handles the rest. We have the necessary experience and dedication to make your filing go smoothly and efficiently.

After filing, a Trustee assigned to your case may require additional financial documentation, but audits are extremely rare . In the rare instance of an audit, we have successfully assisted our clients through the audit with no problems.

Surplus Income Adds To The Cost Of Bankruptcy

Consequences of Bankruptcy Fraud

As mentioned above, you may be required to pay a portion of your monthly income towards your debts via the Trustee, depending on how much you earn and the size of your household. The principle is that if you earn more than your household needs to survive, you must pay a portion of the surplus income to your Trustee for the creditors. The formula used to calculate this is prescribed by law. In simple terms, you will pay about half the amount deemed to be surplus income to your Trustee. Your Trustee can tell you how the surplus income rule will likely apply in your situation.

In general, the greater your income, the greater the cost of bankruptcy and the more attractive the alternatives to bankruptcy become.

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What Are The Advantages And Disadvantages Of Chapter 11 Bankruptcy

Chapter 11 Advantages / Disadvantages. Filing a Chapter 11 filing also has pros and cons. One of the advantages is that the company generally remains in a better financial position after bankruptcy. Companies can often prevent a bankruptcy court from selling the assets they need to run a business.

Are student loans forgiven after 20 yearsWhen do I have to start repaying my student loans? The student loan cannot be repaid before April 6, one year after graduation. The payouts only start when you earn more than a certain salary. It depends on the type of credit you have.How long does it take to repay my student loans?A student loan can take anywhere from 10 to 30 years to complete, depending on the type of loan. Whiâ¦

The Things That Happen Immediately After Filing Bankruptcy

As soon as you file your Chapter 7 bankruptcy, you are given a case number and a bankruptcy trustee is assigned to your case. The bankruptcy trustee will oversee your bankruptcy filing, will review your bankruptcy forms, and may ask for additional documents to verify your information. The trustee will also conduct the meeting of creditors.

Protection from your creditors begins immediately after filing for Chapter 7 or Chapter 13 bankruptcy. This is called the automatic stay. Once you file and the automatic stay takes effect, your creditors are not allowed to take collection action against you.

After you file for bankruptcy protection, your creditors can’t call you, or try to collect payment from you for medical bills, credit card debts, personal loans, unsecured debts, or other types of debt. Wage garnishments must also stop immediately after filing for personal bankruptcy.

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The Truth About Bankruptcy

If youre reading this, youre probably thinking about bankruptcy. The world may tell you this route is a fresh start . . . or a horrible ending. But whats the truth about bankruptcy?

In simple terms, bankruptcy is a legal process a person can go through to clear some of the debts theyre unable to pay.

If youre so overwhelmed by debt that bankruptcy feels like your only option, know these three things: 1) There is hopeand you will be okay. 2) There are other optionsand you should try every single one before jumping into bankruptcy. 3) Bankruptcy does not define you and will not be the end.

Keep these three things in mind as you read through the rest of this article and learn the truth about bankruptcy, including a breakdown on these specific topics:

Myth #: You Can Only File For Bankruptcy One Time

Long

Wrong. While the bankruptcy laws were tightened in 2005, you are still permitted to file for bankruptcy more than once, depending on when you filed and the type of bankruptcy.

In Chapter 7, you can receive a discharge once every 8 years, and in Chapter 13, you can receive a discharge every 2 years.

If you get discharged through Chapter 7, you have to wait 6 years before obtaining a discharge through Chapter 13.

If you obtain a Chapter 13 discharge, you must wait 4 years before getting a discharge through Chapter 7.

If your prior case was dismissed, there is typically no waiting period to re-file . In these situations, it is crucial to contact a knowledgeable bankruptcy attorney, as there are certain motions that must be filed in order to extend the bankruptcy protection in your current case. Our Firm has the knowledge and experience to guide you through this process. We have assisted numerous clients with subsequent filings.

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Advantages Of Filing For Chapter 13 Bankruptcy

There are advantages that address the drawbacks of Chapter 13 bankruptcy. While it generally takes longer in Chapter 13 to pay off your debts, you’ll have more time to make your payments, and Chapter 13 trustees may be flexible on the terms of your payments. For instance, you may be able to:

  • stretch out your debt payments,
  • reduce the amounts of your payments, or
  • give up an item of your property that you’re making payments on.

Note that once you successfully complete a repayment plan under Chapter 13, individual creditors can’t obligate you to pay them in full.

Further, although a Chapter 13 bankruptcy will stay on your record for years, it is a small trade-off for missed debt payments, defaults, repossessions, and lawsuits that could hurt your credit even more and be harder to explain to a future lender than bankruptcy.

In many cases, declaring bankruptcy can get you started sooner on rebuilding your credit. While you can only file under Chapter 7 once every 6 years, you can always get a Chapter 13 plan if you encounter another financial disaster before you’re entitled to file for Chapter 7. In other words, you may file for a Chapter 13 plan repeatedly .

What Are The Risks Of Filing Bankruptcy

Failure to file for bankruptcy carries significant risks when bankruptcy is required. Some of these risks are: Income. Someone with multiple jobs or a low income may be in a better position to file for bankruptcy. Because if you expect an increase in your income, you may not qualify for a Chapter 7 layoff.

How often can you file bankruptcy

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Pros And Cons Of Claiming Bankruptcy

The best and most desirable effect of claiming a bankruptcy in Ontario, is that it gives an individual with overwhelming debts the opportunity for a fresh financial start. It does this by eliminating debt, stopping collection calls and ending wage garnishment orders.

However, not all debts can be eliminated. It is very important to ensure that you know which of your debts will be absolved before declaring bankruptcy.

Bankruptcy is also not without some consequences. While the pros of claiming bankruptcy means that your debts will be eliminated, you need to balance this against any cons of bankruptcy including any assets you may lose and the effect on your credit score.

What Are The Consequences Of Filing For Bankruptcy

CONSEQUENCES OF BANKRUPTCY FOR THE BANKRUPT AND CREDITORS

Individuals and businesses sometimes reach a level of financial difficulty that a decision is made to look into the possibility of filing for bankruptcy. Indeed, there are situations where choosing bankruptcy is the most logical course. At the same time, bankruptcy filing should never been seen as an easy way to get out from under a mountain of financial obligations. There are consequences to bankruptcy that should be carefully weighed against the benefits. Here are a few examples.

Filing for bankruptcy can also impact future career opportunities. Often, a person who has gone through bankruptcy filing in the recent past is not eligible for consideration as a director in a business. It may also be impossible to hold certain offices in local organizations that would be helpful in furthering the career. The simple act of filing may diminish the level of confidence that current customers have in the individual or company, and can also put off potential clients who prefer to go with an entity that is more financially stable.

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What Are The Pros And Cons Of Filing Chapter 7 Bankruptcy

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In a Nutshell

Filing for bankruptcy offers a powerful way to eliminate debt and get a fresh start. But, as with everything there are downsides to filing bankruptcy, too. Use this article to explore the advantages and drawbacks of Chapter 7 bankruptcy.

Written byAttorney Andrea Wimmer.

Chapter 7 bankruptcy is one of the most powerful debt relief options available in the United States. It has helped many people get out of poverty and get a clean financial slate. It gives you a fresh start by erasing your debts. But filing bankruptcy is a personal decision and itâs important to fully consider whether itâs the right option for you. This article explores the pros and cons of filing Chapter 7 bankruptcy.

Myth #: People Who File For Bankruptcy Are Stealing And May Go To Jail

Totally False. Each year, over one million people choose to file for bankruptcy, whether through Chapter 7 or Chapter 13. These are good people, just like you, who are in difficult financial situations.

While there is always a bad seed in every group, the majority of bankruptcy filers are in desperate need of relief and turn to the advantages of bankruptcy to assist them through this difficult time. Whether you lost your job and cant pay your credit cards, or became ill or injured and incurred significant medical bills, you are not a bad person for choosing bankruptcy relief.

Congress created the federal bankruptcy laws to assist hard working people eliminate their debts and move on with their lives. If you are facing this type of hardship, our Firm can help.

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Bankruptcy Consequence Possible Loss Of Assets

A serious negative consequence of bankruptcy is that you might have to surrender certain property to your bankruptcy trustee who will sell the asset and distribute any funds collected from the sale to your creditors.

However, there is good news because there are bankruptcy exemptions in every province and territory that lists property that a debtor going bankrupt is able to keep.

The exemptions vary from province to province but you might be able to keep your car, home, furniture, investments and other property!

Even if your assets are not protected by the exemptions in your province your trustee may allow you to keep the asset if there is too much effort in selling the property.

Non-exempt property will only be sold if your trustee believes a net gain will be possible.

If you have significant assets that would be lost in bankruptcy you might want to consider a consumer proposal.

How Long Do Bankruptcies Stay On Your Credit Report

What You Should Know About the Consequences of Filing for ...

The length of time that a bankruptcy filing stays on your credit report depends on what type of bankruptcy you filed. We took a look at Chapter 7 and Chapter 13, which are the two main types of consumer bankruptcies, and to see how their impacts on your credit score differ.

  • Chapter 7 bankruptcy: Also known as liquidation bankruptcy, Chapter 7 is what Harrison refers to as “straight bankruptcy.” It’s the most common form of consumer bankruptcy and is usually completed within three to six months. Those who file for Chapter 7 will no longer be required to pay back any unsecured debt , like personal loans, credit cards and medical expenses, but they may have to sell some of their assets to settle secured loans. Chapter 7 bankruptcies stay on consumers’ credit reports for 10 years from their filing date.
  • Chapter 13 bankruptcy: Harrison refers to Chapter 13 as the “wage earner’s bankruptcy.” This form of filing offers a payment plan for those who have the income to repay their debts, just not necessarily on time. About a third of bankruptcies filed are Chapter 13 . Those who file are still required to pay back their debts, but instead over a three-to-five year time frame. Chapter 13 bankruptcies stay on consumers’ credit reports for seven years from their filing date.

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