someone once said that the only guarantees in life are death and taxes. But there are more, the economic situation is always changing, usually from boom to bust.
All of us like to feel secure, and look to our leaders to provide the right conditions to acheive that security, but in reality their options are limited in the modern world. in addition, much of what goes onis beyond the reach of politicians, as many of us have learnt, to our cost, in recent years.
As a result of so many people losing their jobs and businesses in the recent economic slowdown, bankruptcy is now a real possibility for many people, and many are looking for sound finacial advice, not leasr about bankruptcy.
A chapter 13 bankruptcy is basically a situation where an individual or enterprise turns their affairs over to the federal court, which then reschedules their debt structure and commit them to a repayment plan, in which all outstanding debt is paid over a 3-5 year period.
This may sound fair and reasonable, and in a strict moral sense it is, however the criteria on which how much the debtor can afford to repay each month varies from state to state, and often leave the debtor with very little money to live on.
However, one of the advantages is that there is no forced sale of assets to repay creditors which means that businesses for example, keep their machinery etc., as everything is focused on repayment of its debts. Of course this also means that when the business comes out the other side and the bankruptcy is discharged, the business can carry on, hopefully in good shape without having to spend thousands on new equipment etc.
Once chapter 13 is filed, no one who is owed money can press for forclosure. If a business for example, owes money on capital equipment, this means that they can keep it, subject to the repayments included in the repayment plan being met. The outcome is that the business can therefore continue to do business with no loss of key assets, and the creditors will eventually get paid in full, rather than potentially lose money in a chapter 7 liquidation case.
The alternative would be a chapter 7 filing, where all assets are liquidated and the proceeds distributed amongst the creditors. However, there is often not enough money to repay in full, or even close to it, thus making chapter 13 a more satisfactory method as more debt is repaid.
Bankruptcy should not be undertaken lightly and can be a traumatic experience. If you need additional free information regarding declaring yourself bankrupt, go to this free website declaring yourself bankruptwww.declaringyourselfbankrupt.net.
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