How To Decide On The Type Of Insolvency Case You Need To File
Bankruptcy, in its nascent stage, was formulated for the benefit of creditors. 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 been transformed a good deal over time. In present days, bankruptcy is normally filed by a lender who acknowledges his inability to repay his loans. This enables the debtor to conveniently remodel 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 example, in the US follows a Bankruptcy Code according to which there are six different kinds of bankruptcy known as Chapters while Netherlands abides by the Dutch Bankruptcy Code. Again, Tampa Chapter 7, more commonly termed as straight bankruptcy, and Tampa Chapter 13, also known as Wage Earner Bankruptcy, may have laws that are different from the ones followed in other states of the US.
When an individual files for Straight Bankruptcy, he or she needs to give up all properties that are free from taxes and other liabilities. The trustee handling the bankruptcy takes the proceeds from these assets and divides it among the creditors. This is how the debtor is relieved of a part of or the whole loan sum, as may be eligible aganst the proceeds derived from the surrendered possession. The US bankruptcy laws permits a citizen to file for this type of bankruptcy only once in every eight years. Post the amendment made in the year 2005, the applicant must also go through a test to find out whether he or she is qualified to file for this bankruptcy. Failure in this test leads to the rejection of the bankruptcy application and at times recommends Wage Earner Bankruptcy to the applicant. It is necessary to be advised by an efficient bankruptcy attorney for finding the best way to deal with this insolvency.
As the name suggests, Wage Earner Bankruptcy is meant for those who have a steady flow of earnings. Under this type, the debtor is required to go for a repayment plan in which the applicant chooses to repay his debt with a portion of his income. Based on factors like income, expenditure, assets, etc., the repayment period can be anything from three to five years. The tenure cannot go beyond the five years’ cap. In this case too the trustee plays a pivotal role. Debtors pay the trustee who then pays the creditors involved. Again, in case of the debtor’s failure to pay, legal proceedings will act upon the trustee’s motion.
As is evident, it is important to hire a bankruptcy lawyer or attorney who possesses the necessary experience and potential to handle your case. It is also essential that you maintain great transparency with your lawyer. 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.