Voluntary Versus Involuntary Bankruptcy
As a threshold matter, bankruptcy cases are either voluntary or involuntary. In voluntary bankruptcy cases, which account for the overwhelming majority of cases, debtors petition the bankruptcy court. With involuntary bankruptcy, creditors, rather than the debtor, file the petition in bankruptcy. Involuntary petitions are rare, however, and are occasionally used in business settings to force a company into bankruptcy so that creditors can enforce their rights.
How To File For Bankruptcy
Filing for bankruptcy is a legal process that either reduces, restructures or eliminates your debts. Whether you get that opportunity is up to the bankruptcy court. You can file for bankruptcy on your own, or you can;find a bankruptcy lawyer, which most experts regard as the prudent avenue to pursue.
Bankruptcy costs;include attorney fees and filing fees. If you file on your own, you will still be responsible for filing fees. If you cant afford to hire an attorney, you may have options for free legal services. If you need help finding a lawyer or locating free legal services, check with the American Bar Association for resources and information.
Before you file, you must educate yourself on what happens when you file for bankruptcy. Its not simply a matter of telling a judge Im broke! and throwing yourself at the mercy of the court. There is a process a sometimes confusing, sometimes complicated process that individuals and businesses must follow.
The steps are:
Attend Your 341 Meeting
Your 341 meeting, or meeting of creditors, will take place about a month after your bankruptcy case is filed. Youâll find the date, time, and location of your 341 meeting on the notice youâll get from the court a few days after filing bankruptcy. Due to the COVID-19 pandemic, all 341 meetings are held either by video conference or via telephone until at least October.
The main purpose of the 341 meeting is for the case trustee to verify your identity and ask you certain standard questions and most last only about 5 minutes. Your creditors are allowed to attend and ask you questions about your financial situation, but they almost never do.
ââ You must bring your government-issued ID and social security card to the meeting. If you donât bring an approved form of both, the trustee canât verify your identity and the meeting cannot go forward. You should also bring a copy of your bankruptcy forms to the meeting, along with your last 60 days of pay stubs, your recent bank statements, and any other documents that your trustee has asked for. ââ
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Description And Characteristics Of Fraud
.05;;;;;;;Fraud is a broad legal concept and auditors do not make legal determinations of whether fraud has occurred. Rather, the auditor’s interest specifically relates to acts that result in a material misstatement of the financial statements. The primary factor that distinguishes fraud from error is whether the underlying action that results in the misstatement of the financial statements is intentional or unintentional. For purposes of the section, fraud is an intentional act that results in a material misstatement in financial statements that are the subject of an audit.4
.06;;;;;;;Two types of misstatements are relevant to the auditor’s consideration of fraudmisstatements arising from fraudulent financial reporting and misstatements arising from misappropriation of assets.
Fraudulent financial reporting need not be the result of a grand plan or conspiracy. It may be that management representatives rationalize the appropriateness of a material misstatement, for example, as an aggressive rather than indefensible interpretation of complex accounting rules, or as a temporary misstatement of financial statements, including interim statements, expected to be corrected later when operational results improve.
How To File For Bankruptcy In Canada
If we decide that bankruptcy is necessary, we will then prepare the required documents. These documents include your sworn Statement of Affairs and your monthly cash flow budget. The Statement of Affairs is a document that:
Part of the filing process is that the insolvent person swears that the document is accurate. This is done in our office as our Trustees are also commissioners for taking oaths for the work we do. All of this is done in my office.
I then electronically file the sworn Statement of Affairs and other required documents with the Superintendent of Bankruptcy. Once the Official Receiver, who is the Superintendent of Bankruptcys local official, reviews and accepts the filing, the insolvent person is officially bankrupt.
This is how a person files for bankruptcy in Canada.
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How Do Cash Balance Plans Differ From Traditional Pension Plans
While both traditional defined benefit plans and cash balance plans are required to offer payment of an employee’s benefit in the form of a series of payments for life, traditional defined benefit plans define an employee’s benefit as a series of monthly payments for life to begin at retirement, but cash balance plans define the benefit in terms of a stated account balance. These accounts are often referred to as “hypothetical accounts” because they do not reflect actual contributions to an account or actual gains and losses allocable to the account.
What Happens When You Are Declared Bankrupt
A Bankruptcy Inspector from the ISI will serve you with a copy of the Orderof Adjudication and Warrant of Seizure. The Inspector willalso give you a form to complete, requesting various details, which the ISIwill use to contact you and process your bankruptcy.
Your bank accounts will be frozen, except for one current account in whichyou can keep a balance of up to 1,000 for general living expenses.
The ISI will contact all financial institutions and inform them that youhave been made bankrupt.
As soon as your bankruptcy starts, you are free of debt. The OfficialAssignee now owns your assets and administers your estate. Your creditors canno longer seek repayment directly from you. They must deal directly with theOfficial Assignee and all correspondence should be forwarded to him.
You must contribute any surplus income to the Official Assignee.
Your name will appear in the Bankruptcy Register, which is kept in the Officeof the Examiner of the High Court. Anyone can check this register.
Read more in the ISIs guide Afteryou are made bankrupt .
Income
The Official Assignee will negotiate an Income Payment Agreement or seek anIncome Payment Order for the surplus of your income over the reasonable livingexpenses for your situation, based on the ISIsguidelines. The agreement or order will last up to 3 years. Act 2015 reduced this period from 5 years, with effect from 29January 2016.)
No deductions will be made from social welfare payments.
Assets
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Communicating About Possible Fraud To Management The Audit Committee The Securities And Exchange Commission And Others37
.79;;;;;;;Whenever the auditor has determined that there is evidence that fraud may exist, that matter should be brought to the attention of an appropriate level of management. This is appropriate even if the matter might be considered inconsequential, such as a minor defalcation by an employee at a low level in the entity’s organization. Fraud involving senior management and fraud that causes a material misstatement of the financial statements should be reported directly to the audit committee in a timely manner and prior to the issuance of the auditor’s report. In addition, the auditor should reach an understanding with the audit committee regarding the nature and extent of communications with the committee about misappropriations perpetrated by lower-level employees.
.80;;;;;;;If the auditor, as a result of the assessment of the risks of material misstatement, has identified fraud risks that have continuing control implications , the auditor should consider whether these risks represent significant deficiencies that must be communicated to senior management and the audit committee.38 . The auditor also should evaluate whether the absence of or deficiencies in controls that address fraud risks or otherwise help prevent, deter, and detect fraud represent significant deficiencies or material weaknesses that should be communicated to senior management and the audit committee.
Fact Sheet: Cash Balance Pension Plans
U.S. Department of LaborEmployee Benefits Security AdministrationNovember 2011
If your company is converting its traditional pension plan benefit formula to a new cash balance pension plan benefit formula, you may have some questions about how this change will affect you. The following are responses to some of the most often asked questions. These responses are designed to provide general information and are not legal interpretations of ERISA or the Internal Revenue Code. If you still have questions, call one of our offices or email your question to EBSA.
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Take Bankruptcy Course 2
After filing your bankruptcy forms, you will need to complete a Debtor Education Course from an approved credit counseling agency. It can be completed online or by phone and typically takes at least 2 hours and costs between $10 – $50, unless youâre eligible for a waiver.
The purpose of the course is to educate you on making smart financial decisions going forward but does not provide legal advice about the bankruptcy process. Youâll learn how to prepare a budget and avoid incurring debt with high interest rates.
Youâre not eligible to receive your bankruptcy discharge and obtain a fresh start if you donât complete the course and file your certificate of completion from the credit counseling agency with the court.
What Information Is My Employer Required To Give Me To Explain The New Cash Balance Plan Formula And When Should I Receive This Information
Many employers voluntarily provide helpful information about these conversions in advance of the change becoming effective. Make sure you have all the information that the employer has provided. If you are still not sure if you have enough information to understand the plan change, you have a right to contact your plan administrator and ask for more information or help in understanding the change and any choices you have in conjunction with the change.
Plan administrators are generally required to give at least 45 days advance notice of plan amendments that significantly reduce the rate at which plan participants earn benefits in the future.
After the plan is amended, the plan administrator is required to provide all plan participants with a Summary of Material Modifications to the plan or a revised Summary Plan Description. This document will summarize the changes to your plan.
In addition, under the Age Discrimination in Employment Act , an employer requiring an employee to sign a waiver of rights and claims when choosing between plans is required to provide enough information to enable the employee to make a knowing and voluntary decision to waive ADEA rights. In most cases, an employee must be given at least 21 days to sign the waiver and at least 7 days to revoke the agreement.
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How Do I Declare Bankruptcy
In order to file bankruptcy, you must file a petition for bankruptcy. After that, you must file a schedule of assets and a statement of financial affairs. The schedule of assets is a list of all the assets you own. The statement of financial affairs should describe what debts you owe and why you are filing for bankruptcy.
The schedule and the statement must be filed within 14 days after you file the petition for bankruptcy. If you fail to file either document in time, the case will be dismissed. Therefore, it is highly recommended that you file the schedule and the statement with the petition for bankruptcy so that you dont run the risk of having your case dismissed.
Condonation Of Irregularities Or Non
Sometimes a party making an application, or taking a step in terms of the Act, will omit prescribed details, or fail to act within the time stipulated, or commit some other procedural breach. When this happens, it is important to establish whether what has been done is invalid by reason of the defect or irregularity.
The starting point is section 157, which provides that nothing done under the Act will be invalid by reason of a formal defect or irregularity, unless a substantial injustice has been thereby done, which in the opinion of the court cannot be remedied by any order of the court. The effect of this is the following:
- If a formal defect has not caused a substantial injustice, the procedural step in question is valid. It is said that the court may condone the defect in these circumstances, but this seems incorrect, since section 157 does not confer on the court the power to condone defects.
- If a formal defect has caused a substantial injustice, but the prejudice to creditors can, in the opinion of the court, be remedied by an appropriate order, then the defect is not fatalprovided, of course, that the party concerned complies with the corrective order.
- If a formal defect has resulted in a substantial injustice, and the prejudice to creditors cannot be cured by any order of the court, then the procedural step is invalid.
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What Happens To My Credit If I Declare Bankruptcy
When you declare bankruptcy, it’s a sign that you are no longer paying your debts as originally agreed, and it can seriously damage your credit history. That said, the two types of bankruptcy aren’t treated the same way. Because chapter 7 bankruptcy completely eliminates the debts you include when you file, it can stay on your credit report for up to 10 years.
While chapter 13 bankruptcy is also not ideal from a credit standpoint, its setup is viewed more favorably because you are still paying off at least some of your debt, and it will remain on your credit report for up to seven years.
Shortly after your bankruptcy is discharged by the courtmeaning you no longer owe the debts you’ve included in your filingit may be difficult to get approved for credit, especially with favorable terms. There are some lenders, however, who specifically work with people who have gone through bankruptcy or other difficult credit events, so your options aren’t completely gone.
Also, the credit scoring models favor new information over old information. So with positive credit habits post-bankruptcy, your credit score can recover over time, even while the bankruptcy is still on your credit report.
Emergency Banking Act Of 1933
The emergency banking legislation passed by the Congress today is a most constructive step toward the solution of the financial and banking difficulties which have confronted the country. The extraordinary rapidity with which this legislation was enacted by the Congress heartens and encourages the country.Secretary of the Treasury William Woodin, March 9, 1933
I can assure you that it is safer to keep your money in a reopened bank than under the mattress.President Franklin Roosevelt in his first Fireside Chat, March 12, 1933
Immediately after his inauguration in March 1933, President Franklin Roosevelt set out to rebuild confidence in the nations banking system. At the time, the Great Depression was crippling the US economy. Many people were withdrawing their money from banks and keeping it at home. In response, the new president called a special session of Congress the day after the inauguration and declared a four-day banking holiday that shut down the banking system, including the Federal Reserve. This action was followed a few days later by the passage of the Emergency Banking Act, which was intended to restore Americans confidence in banks when they reopened.
The Act, which also broadened the powers of the president during a banking crisis, was divided into five sections:;
Endnotes
- 1;The gold standard was partially restored by the;Gold Reserve Act of 1934.;The United States remained on the gold standard until 1971.
Bibliography
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Provisions And Clauses Prescribed In
;;;;; The contracting officer shall insert the provision at 52.252-1, Solicitation Provisions Incorporated by Reference, in solicitations in order to incorporate provisions by reference.
;;;;; The contracting officer shall insert the clause at 52.252-2, Clauses Incorporated by Reference, in solicitations and contracts in order to incorporate clauses by reference.
;;;;; The contracting officer shall insert the provision at 52.252-3, Alterations in Solicitation, in solicitations in order to revise or supplement, as necessary, other parts of the solicitation that apply to the solicitation phase only, except for any provision authorized for use with a deviation.
;;;;; The contracting officer shall insert the clause at 52.252-4, Alterations in Contract, in solicitations and contracts in order to revise or supplement, as necessary, other parts of the contract, or parts of the solicitations that apply to the contract phase, except for any clause authorized for use with a deviation.
How Do Cash Balance Plans Work
In a typical cash balance plan, a participant’s account is credited each year with a “pay credit” and an “interest credit” . Increases and decreases in the value of the plan’s investments do not directly affect the benefit amounts promised to participants. Thus, the investment risks are borne solely by the employer.
When a participant becomes entitled to receive benefits under a cash balance plan, the benefits that are received are defined in terms of an account balance. For example, assume that a participant has an account balance of $100,000 when he or she reaches age 65. If the participant decides to retire at that time, he or she would have the right to an annuity based on that account balance. Such an annuity might be approximately $8500 per year for life. In many cash balance plans, however, the participant could instead choose to take a lump sum benefit equal to the $100,000 account balance.
If a participant receives a lump sum distribution, that distribution generally can be rolled over into an IRA or to another employer’s plan if that plan accepts rollovers.
The benefits in most cash balance plans, as in most traditional defined benefit plans, are protected, within certain limitations, by federal insurance provided through the Pension Benefit Guaranty Corporation.
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