EasyBadCreditRepair.com

Under the bankruptcy law code a Chapter 12 bankruptcy is known as Family Farmer Bankruptcy or Family Fisherman Bankruptcy. It begins by filing a petition with the bankruptcy court that has jurisdiction over the place of the individual’s or company’s residence. The debtor must file with the court his schedule of assets and liabilities, schedule of his present income and expenses, schedule of any executor contracts and unexpired lease and a statement of his financial affairs.

For cases that may involve a husband and wife they may file a joint petition or individual petitions depending on what they agreed upon. Bankruptcy lawyers can assist the filing of these proceedings and create a customized program applicable for the debtor’s case. Chapter 12 allows financially challenge family farmers and fishermen to make a proposition on how to pay their debts.

Under this chapter they can adapt a plan to make installment payments for a span of three to five years. Sometimes the court can approved a longer period but it must there must be valid proof and reason (such as child support or alimony) before the court can approve the extended payment period. Chapter 12 is less complicated and less expensive than Chapter 11. Farmers and Fishermen do not like to file under Chapter 13 since it is mainly designed for wage earners who may have smaller debts than them. The Bankruptcy Code also states that only those family farmer or family fishermen with regular annual income can file for Chapter 12 bankruptcy relief. The main reason for this is to ensure that the debtor’s annual income is fixed and regular so that they can make payments. The law also makes allowances for special cases when the family farmer or family fishermen has seasonal income. Relief under this Chapter is voluntary and only the debtor can file a petition.

The petition can be dismissed if during the next 180 days the debtor fails to appear before the bankruptcy court. The debtor cannot file under this Chapter if even if he complies with the court if creditors seek relief from the bankruptcy courts to recover property upon which they hold liens. As of 2005, the courts charges $200 case filing fee and $39 miscellaneous administrative fee. This fees need to be paid to the clerk of court upon filing. Sometimes these fees can be paid through installment provided that this arrangement was approved by the court. The installments are limited to four and are limited to 120 days after filing the petition. Debtors should be aware that they need to file these fees since if they do not do so the courts can dismissed the case. Chapter 12 bankruptcy plan can last from three to five years.

The court may grant a “hardship discharge” to a debtor even if the debtor fails to complete the plan payments. The basis of the granting of this discharge will be injury or illness that precludes the employment of the debtor. This discharge however does not apply for any debts that are non dischargeable as what you find under Chapter 7 case.

Bankruptcy does lead to a crippling situation. Assets are more likely to get washed out and debts will still haunt you years after. Next, you will observe that after bankruptcy proceedings your credit standing drops to God knows how low. But hey enough with lingering on your dread, it’s time to pick yourself up from the slump your in. Think your bankruptcy as a major reboot, a fresh start to rebuild and to live wisely. There are ways to get oneself credit repaired after bankruptcy. It all takes a major unlearning of bad habits and a few learning of good ones.

Change Your Bad Habits

First thing that you have to unlearn are bad habits. Overspending is one big mistake that many people are fondly tempted to commit. I remember an alarming news in the past where credit cards companies are targeting college students. The consequence is mounting debts for a no-wage earning adolescents. Even earning professionals are not exempt from making poorly thought of decisions. Impulse buying can be so damaging. The remedy is to plan out your monthly expenses and sticking to it. Setting aside 10% of your income as savings can be a source of emergency funds or become a tool for you to buy assets in the future.

Next rule to learn is “study and examine all investment ventures”. Majority of foreclosures occurred because of bad investment decisions. Many had been enticed by sub-prime lending, which many people can sustain under a healthy economy. But when recession crept in and brought job loss and skyrocketing interest rates, that’s when the investment collapsed.  The most hurtful part comes when the property was acquired thru a loan. It ended with people losing their asset and gaining more liabilities with the bank. The lesson here is never enter into a volatile investment using borrowed money.

Third, ants teach us a valuable lesson of having contingency plan during tough times. Job loss wouldn’t have been too difficult if there was about 6 months worth of savings set aside to tide one’s way until you find another job. Ants teach us to save up for the rainy day. Maybe one should learn from that moving forward.

After learning from your mistakes, it’s time to get oneself moving to getting your credit worthiness back up. Bankruptcy does deliver such a huge blow to your credit score and it sticks on your credit report for years. However, this is not a dead end but just a temporary road block. You could get credits after a bankruptcy.  Here are the ways to reestablish your credit worthiness.

Being informed at the rudiments of credit scoring is a powerful tool. Knowing the considerations to generate your score puts you at the advantage as you would know what efforts are needed to get your score up.

“Payment History” forms 35% of your credit score. That means you have to start and continue to be a faithful payor to your creditors.

“Amounts Owed” is weighted to be 30% of your score. You should at least keep your outstanding balance to the least possible amount. The higher one’s outstanding due the lower the score.

“Length of your Credit History” forms 15% of your credit score. The shorter you are able to repay and close the loan the better it affects your credit standing.

“New Credits” are recently approved loans or credit lines. Having just a few would be best. 10 percent of the credit score is taken from this category.

“Types of Credit Used” is about the credit variation you are involved with. A mix of secured credit cards, student loans and extra loans like buy now pay later increase your score. This category forms 10 percent of your credit score.

What To Do After Bankruptcy

Now how do you work on these categories? First, get a secured credit card with a nominal interest rate. Since Bankruptcy will prohibit you possessing an unsecured credit card, a secured credit card will be your tool to work on all factors. Might be scary at first since most bankruptcy is due to credit card misuse but I tell you, this is your way to recovery as well. Just remember what you learned from your mistake. This time, use the 35/40-day no-interest period on your card and zero out your debts. Another trick is to bill something on the card and pay it off shortly. This will do good on your payment history and the amounts owed.

Next, get other credit sources. This will be for the types of credits used, payment history and amounts owed. You may want to consider having a short-term loan like a student loan or a bad credit loan that has a negotiable interest rate. By paying these loans religiously, you would definitely get good points for the above mentioned factors.

Fourth, never close any zero-balance accounts. They do not pose any risk for you but instead they work wonders for your credit report. It would indicate you having a wide number of credit used, a good payment and credit history.

Having a good business relationship with your lenders would work to your advantage. This would allow you chances of renegotiating your terms at a time when you are in a tight situation. This would also work both ways as the lenders are guaranteed of continued payment and you reduce the risk of having a bad remark on your credit report.

Lastly, keeping an eye to the entries that get sent to the credit bureau is a good thing to do. It would be best you are subscribed monthly to one credit bureau report and get a copy of the other two credit reports annually.  Or better yet you can subscribe to TrueCredit for under $20/month and get real time monitoring from all three major credit bureaus.

Economic recession has caused many Americans to get faced with personal debt. Since the economic downturn happened, many individuals have lost their jobs which resulted to reducing their income.  Better yet their credit score has suffered.   This becomes the main reason as to why they cannot pay for their debts and forced them to file bankruptcy. What makes it worst is that they are no longer able to get fresh loans for the period of 7-10 years since the they have lost their credit scores as well as their eligibility.

Of course, anything can be avoided. In this situation, such bankruptcy and eligibility can be avoided through debt settlement. That is when debtors negotiates with their creditors and eliminates at least 50-70% of unsecured debt. Before the debtor is required to hire a debt settlement company, he must first have at least $10,000 unsecured debts and such debts must be in tack so as to keep it uncluttered.

The negotiation then starts. The debtor will be advised by the company negotiator to stop paying the creditor as a proof that the debtor in actually in financial incapability. Once this happens, the creditor will then call a collection agency, after 90-120 days, to recover the debt from the debtor. What the debtor can only wish for is that the creditor will be forced to pay in full after having several threatening calls from the collection agency.

The creditor will be taken advantage of by the collection agency by paying back only 20-30% of the debt of the creditor which will leave the creditor with no choice but to agree. Now here comes the negotiator who will offer 30-50% of debt repayment in one condition, and that is for the creditor to slash off remaining amount of debt (see CuraDebt review).

What will make the creditor accept and agree with the offer is the threat of the negotiator that if disagreement arises, the debtor will have to file bankruptcy. The creditor has just to choose between having a smaller or greater recovery, between the negotiator’s offer and the collection agency’s offer.

As the creditor agrees to the offer, the debtor should then pay the agreed amount in a specified time. Such negotiation is the best thing one could do in order to get rid of unsecured debt. Debt settlement is currently becoming a popular  option for the American’s with debts amounting to $10,000 and above. See link below to find a professional debt help in your place.

Sick and tired of dealing with your debt problems?

Pay the creditors 30-40% of you debt and stop the phone calls.

When certain people undergo a great degree of financial pressure they might contemplate on filing for bankruptcy. A person only declares that he is bankrupt when he is insolvent (his liabilities are more than his assets). Bankruptcy therefore is the inability of the person to pay his debts. Bankruptcy is designed by the Federal courts to help consumers eliminate their debts or repay them under the protection of the bankruptcy court.

Chapter 7 is contains a liquidation process where in the debtor’s non-exempted assets are sold by the Chapter 7 trustee (one who the court appoints to review the debtor’s schedules and also acts as the debtor’s representative) and the money coming from the sale will be divided among the creditors.

Chapter 7 is a conventional way of declaring bankruptcy. When you declare bankruptcy under Chapter 7 this means all of your debts will be discharged but with some exemptions such as alimony, child support payments and taxes (if applicable). Although you are given a clean slate some debts cannot be discharged in bankruptcy. In Chapter 7 bankruptcy you choose the property that you are qualified to keep from a list of exemptions made by the state.

Chapter 7 is a popular choice for bankruptcy filers because of they are not require to pay back any portion of their debts. Although this may be the case but under the new bankruptcy law persons whose income is higher than the median income for a family of their size in their particular state may not be allowed to file under Chapter 7 bankruptcy. In Chapter 7, you need to take “means test” which are calculations made to analyze if you have the means to pay your debt. This “means test” can be taken online.  The means test was established with the bankruptcy code as an amendment to it last 2005.
Chapter 7 begins by filing the official petition, schedules and statement of financial affairs of the debtor. These forms require the debtor to list all of his assets and all of his debts along with his present financial history. This can be a time consuming job since you are not only required to list all of your debts but your list should also contain the debts that are non-dischargeable(examples are family support and criminal restitution). The schedules mentioned also include the list of properties, debts associated with that property and property value. Property also involves other assets that you have not just real estate. After that the debtor should sign the schedule under penalty of perjury. These are then filed in the bankruptcy district which you live for the last 180 days.

An automatic stay then goes into effect which creates a legal wall from creditors where in they cannot collect anything from you. The first meeting of creditors takes place where the trustee can ask the debtors questions under oath about his assets and liabilities. The court appointed trustee takes control of the non exempt assets of the debtor then he sells this to later distribute what he collects to the creditors after deducting the administration case fees.

A 60 day period from the meeting to challenge the debtor’s right to a discharge by filing an adversary proceeding. Individual debtors get their discharge within 4 to 6 months of filing the case. This discharge has an effect on dischargeable debts that existed from the start of the case. After the discharge the debts that were reaffirmed survives the bankruptcy.

Many times, human nature is expressed as impulse before thought, or in economic terms, buy now, pay later. The nature of deferred payment is complicated by the usefulness of credit cards, loans and mortgages. Each time, the economic theory is based on the assumption that you can find the money for payments of principal and interest on a liability without changing your present capability of earning an income.

Reality shows that theory isn’t the same as practice, however. Our situations are never constant. For example, unexpected market changes like in sub-prime mortgages, injury, illness, or job loss, can change your ability to pay a debt instantly.

Other human characteristics that contribute to unmanageable obligation includes not knowing how to budget, not sticking to your budget, emotional type of overindulgent spending, shopaholic buying style like not able to resist special offers, big discounts, or stuff like clothes, games, tech toys, etc. without considering ability to pay.

To get out of debt quickly, be aware of the fact of planned and unplanned change. Learn to adjust your spending up or down depending on your circumstances. The sooner you can respond to change and foretell modifications, the easier it will be to manage and in due course get rid of your debt.

Some short term adjustments may include paying off your debts one at a time, in a systematic and timely manner. Acting promptly to notify your creditors makes it easier to discuss adjustment of payments that may in turn get reduced rates, waived payments / late charges, etc. whenever possible.

Another well-liked means of getting back on track is to combine your debts into one loan and pay it off with less monthly payments. There are many different ways to merge debt. The most important step here is to shop for the best terms and lowest interest rate. Terms are usually connected to collateral, or what assets you have to secure your loan principal. You’d be surprised to learn that collateral terms vary even more than interest!

The best scenario in a consolidation loan is to get enough money to cover all your debt at a rate that you can afford to pay with terms flexible enough for potential adjustments in payment up or down. Sometimes this may be as simple as getting a line of credit, or extending one enough to get back on track.

The worst case situation for you is bankruptcy because credit worthiness is lost, which takes years to rebuild after you are discharged. The few breaks for credit after you are bankrupted are undesirable because they are likely to lock you into a debt payment rut that can increase the years and add to the cost for you to be debt free.

  However, between the best and worst scenarios are answers to help you be free of your debt, keep away from bankruptcy, reduce stress, and create opportunity to manage what you now have.

The most trifle things can hurt your credit score severely. Just by being late 30 or 60 days will already cause your score to dip. If only you’ve saved up for your monthly bills and drive to the bank to make the payment then you’d never have to see that negative marking on your credit report. Think about 7 years that your credit report would show a late payment has been incurred or for bankruptcy, it would stick there for up to 10 years. It could have been prevented. You do have control over your time and resources.

If things have gone bad as can be, you can get help from a debt counseling agency. Are you anxious about the repercussions of this decision? Don‘t be. It’s not the comments that payments are arranged through a debt counseling plan that adversely affects your score, it’s the fact that a late payment has occurred.

When considering hiring a debt management agency, make sure you pick wisely which company. Inquire about their programs and how much they each cost. Consider about their fees. Inquire about their sign-up, enrollment and monthly charges. There are premium services which will cost some several hundred dollars while others would cater thrift plans which will cost around $20 or even less.
The search for the right credit management team is no different than shopping for a new gadget. You would normally ask question to the sales agent everything that the product has to offer. Do the same when visiting credit management agency.  Ask questions. Some good questions you could ask them about are: What are the fees involved in their services? How long have they been in business? Do they have certification from the better business bureau? How do they work with your creditors? How do they process things? What makes them good at what they do?

Normally, as you converse with them more questions would come up. Be as naturally inquisitive as possible. If you feel the answers are not believable and satisfying, then try another credit management agency. Remember, you need an agency that is highly competent and precise. If they mess up by turning your payment late, it’s your credit score that’s going to get another blow.

Nonetheless, the advantages of debt management plan are varied. To cite a few, you’d be able to avail low interest rates, see a reduction on your monthly dues, zero late fees, and fewer annoying phone calls and threatening correspondence from creditors. This would mean fewer expenses for you as well.

Once you are able to reestablish a diligent paying habit, you may want to personally negotiate a more comfortable payment plan and a lower interest rate with your creditors. Just a few minutes on the phone may give you a good deal that will last for months until your debt has been repaid.

Overspending may also hamper or slow down your debt repayment. A sale item doesn’t mean you have to purchase it. If you are the type that buys on impulse, do not bring your credit card with you. Leave it at home and use cash until your debt situation is stable. Buy things that are considered needs and not wants.

Cutting back on unnecessary spending and funneling extra cash for debt repayment would create a good impression to creditors. Paying on-time plus bigger amounts makes you appear serious about your debt repayment plan.

Be a smart borrower and you’d never see another stressful point in your life.

Credit history also goes by several names such as credit report and credit reputation. When you are trying to apply for a credit card or any type of loan most lenders will look for your credit history. Your credit history or credit record is maintained under the three major credit bureaus. They are Equifax, Experian and TransUnion. Credit history contains your Fair Isaac Corporation (FICO) score that can help lenders decide whether you are credit worthy or not.

Credit history is simply your financial past reflected on the records. Having a good credit history allows you to avail of a bank loan, get a job, have better insurance rates and reflects you as a good tenant if you are renting an apartment. Once your credit reputation is build up you should keep it in good shape. Having a bank account with a reliable bank reflects on your ability to make immediate payments on your bills in an attempt to establish a good credit history.

Credit history contains complete information on where you live, how you pay your bills and whether you have been sued, arrested or have filed for bankruptcy. Credit reporting companies sell your information to creditors, insurers, employers and other legitimate business that may need them. They used this information to evaluate your application for any loans and the like. Having a good credit history will make life easier for you since you will be able to get loans and lower interest rates. Lower interest rates helps you make smaller monthly payments.

Be careful of paying on time since this can damage your credit history. “Prevention is better than cure” when it comes to fixing your credit score. Once you have the credit report in your hands be sure to carefully inspect this. Keep in mind that these credit records are maintained by humans who can commit an error anytime. Filing for bankruptcy will also be reflected on your credit report and will stay there for 10 years. Increasing your credibility can mean an increase in your reliability as a potential borrower.

Some of the factors that will improve your credit score have to do with you holding a steady job for a long period of time and no frequent movements in your place of residence. Beware of scam artist who offer that they can erase your negative credit history since in truth they can never deliver since what can really help is being able to repay your bills on time will improve your credit report or credit history.

Under the Free File Disclosure Rule of the Fair and Accurate Credit Transactions Act (FACT Act), requires the three major credit bureaus to give you a yearly credit report for free.

When certain people undergo a great degree of financial pressure they might contemplate on filing for bankruptcy. A person only declares that he is bankrupt when he is insolvent (his liabilities are more than his assets). Bankruptcy therefore is the inability of the person to pay his/her debts. Bankruptcy is designed by the Federal courts to help consumers like you and me to eliminate your debts or repay them under the protection of the bankruptcy court.

Before filing for bankruptcy you must first understand that there are available debt relief options that you can have. Bankruptcy laws vary from state to state in the United States but there are some things common in most of them. A person can file a motion in the U.S. Court of Bankruptcy together with the information on his proof of assets, income and outstanding financial obligations.  The first thing to do is to meet with your creditors regarding your financial situation and bankruptcy. In declaring your bankruptcy you are protected from creditors. This gives you time to reorganize and restructure a plan to repay your debts.

In the United States the most common chapters about bankruptcy is contained in Chapter 7 and Chapter 13. Chapter 7 is a traditional form of declaring bankruptcy. When you declare bankruptcy under Chapter 7 this means all of your debts will be discharged but with some exemptions such as alimony, child support payments and taxes ( if applicable). Although you are given a clean slate some debts cannot be discharged in bankruptcy. If you have student loans this will not be discharged too unless you can show that paying this student loans is a burden that you can carry. This is not easy to prove in court. Creditors can no longer run after you nor file any legal action towards you after the debt has been discharged. To have your debts discharge you must sell, liquidate all of your assets to pay your debtor.

In Chapter 7 bankruptcy you choose the property that you are qualified to keep from a list of exemptions made by the state. The state allows you to this these types of properties:

• Home equity called homestead exemption. Under the Bankruptcy Law you can exempt up to $20,200 of equity. Some states do not have this exemption; others allow debtors to protect most of the home equity if not all.
• Insurance.
• Retirement plans
• Personal Property. Most states allow you to keep most household goods.
• Public Benefits. All of these are protected such as Social Security, welfare or unemployment insurance.
• Tools that you use for your profession.

Chapter 7 is a popular choice for bankruptcy filers because of they are not require to pay back any portion of their debts but under the new bankruptcy law persons whose income is higher than the median income for a family of their size in their particular state may not be allowed to file under Chapter 7 bankruptcy. A” means test” needs to be taken which are calculations to know if you do not have the means to pay your debt. This “means test” can be taken online.

Chapter 13 is another option wherein you must also submit a repayment plan. Same scenario applies”creditors cannot harass you or file any legal action against you including home foreclosure”. The difference lies in your sincere intention to pay you creditors so you are exempted from liquidation. This option is better only if you have a stable income aside from this you are obliged to pay your debts in 5 years time, if not you will fall under Chapter 7.

Another requirement for Chapter 13 is to submit within 15 days after your bankruptcy your petition. The plan is brought before the court for approval. In a span of 45 days the court will hold a confirmation hearing with your creditors to review or object your propose repayment plan. Repayment plans usually covers a period from 3 to 5 years.

In Chapter 13 bankruptcy you lose no such property since your source of payment will be from your income.  An “automatic stay” goes in effect even if you choose to go by either Chapter 7 or Chapter 13. The “automatic stay was mentioned previously is the prohibition against your creditors to take action against you unless the court lifts this stay and lets the creditor collects your debts.

Most Americans are feeling the economic crisis and undergoing their own share of tough times because of the present recession. People are having difficulty in managing their own finances. The unemployed work force is growing in numbers. This scenario makes one think of their financial security. The Obama administration wants to provide debt relief for individuals who are momentarily having their share of personal financial dilemma as long as they qualify.
The growing interest rates has caused more than one American to walk away from their mortgages that even the banking industry has coined a nickname for it calling it strategic mortgage defaults. The reason for using a debt relief may be due to the following reasons:

• Some homeowners cannot find a lender who is willing to offer a home refinancing deal since the home has lost its value. This move on the part of the homeowners may sometime force lenders to enter into a revision on their loan by conducting an open dialogue between the homeowner and the lender.
• Because of legitimate reasons such as sudden illness and loss of work homeowners are betting that loan officers will empathize with them enough to take a long time before they foreclose the home owner’s property. This gives them time to catch up on their payments.

An astute observation made by the credit bureau through a research study showed that Americans use debt relief as a calculated move to for a short term financial gain. The basis of this is that the individuals who are availing for a debt relief usually show no outward signs of economic stress. Other people on the other hand have found that the present government offers Government grant for people who may be going through a tough spot. These grants are only given to the real needy ones.  If you are drowning in debt and have no options then the government is willing to give you the grant.  People who qualify for debt relief are those who have loss a job, divorce, medical bills and many more valid reasons.

It is a very wise decision to seek credit counseling to help you get back on your feet. Do not jump into filing for bankruptcy because there are still better options than that. You can seek help on how to create your budget, how to control your spending and how to save for the future. If your income is lower than your bills it only means you are living beyond your means.  This may also imply that you need to drop some of the luxuries that you usually can live without so that your life will improve financially. Your main goal is after debt relief you must be debt free by following this simple rules.

How to Avoid Debt Relief Scams

If you find yourself in a debt situation that makes you feel as if you have no way out then do not let yourself fall victim to debt relief scams. The most undesirable type of scams is one that is categorized as organize criminal activity. They will sweet talk people in giving them their money presumably to help them negotiate with their creditors but in reality they will just take their victim’s money and run away with it. To avoid entrapment or leaving a paper trail behind they would usually ask for cash. These unscrupulous characters go to extra lengths to keep their identity anonymous by changing their fake company names and fake websites that can easily be made offline.

Another scam is the one who says that you can claim US government grants to help you with your debts. They ask for monthly subscriptions but later on after you have paid them, you will come to know that it is all a scam. There are ways of knowing which ones is scam and which one are for real. If the company does not give a full office address with all the necessary details and only uses a P.O. Box, then chances are these addresses are just dummies. To check on whether your present debt relief company is actually paying your debts on your behalf, you can call your creditors directly.

You are much safer if you get the services of a non-profit agency that conforms to the AICCCA standards (Association of Independent Consumer Credit Counseling Agencies). One fact that you might have overlooked is that most creditors would appreciate it if you decide to communicate with them to address your specific financial dilemma.

Some debt settlement scams are as follows:

• These companies will not provide you the complete details on how they would help you deal with your settlement process
• They offer to take preventive measures so that harassing phone callers will stop subjecting to their irritating calls but in reality they will not make a move as they say they would
• They hide from the consumer the actual amount that these consumers need to pay and say that they can help these consumers to save a lot
• They would suggest for you to stop paying your creditor balances or monthly dues and instead open a savings account but they are the only ones who will keep the details of your account without you knowing anything. Wake up since they are on the run with what little money you have left!

There are those who offer fake credit repair services to supposedly help you improve on your credit score. They will charge you with up front payments that are against the law. Never divulge any personal information especially about your bank account. It is your responsibility to guard yourself against such illegal practices after knowing the basic scamming techniques that people will use to take advantage of you even if you are up to your neck in personal debts. As long as there is life there is still hope that one day you can recover from these financial losses.

Bankruptcy is a legal term used for individuals and businesses that have no capacity to pay their financial obligations. There are many businesses that are caught in the middle of economic downturn. Some individuals are bearing the burden of unpaid huge medical bills and who have suffered a major financial loss because of their sickness. These individuals and businesses may find no alternative recourse but to declare bankruptcy. Under Chapter 11 of the Bankruptcy code these bankruptcies are categorize as a rehabilitative process to help restore the debtor’s ability to pay his debt while discharging others.  There are minor differences between individual and corporate declaration of bankruptcy although there are complexities that can be seen when it comes to corporate bankruptcy.

In starting with the procedures for filing bankruptcy the debtor files a petition in the bankruptcy court which includes the list of his assets, debt and a request for debt relief. The bankruptcy court will assign a “trustee” to go over the lists and help the debtor to create a plan so that he can liquidate his assets to pay his debt. Some assets such as primary place of residence and vehicles are exempted from this liquidation process.

After the plan is approved by the bankruptcy court, the court will then issue an order that the listed debts are to be paid by the liquidation of the debtor’s assets. At this time the creditors will cease from making collection attempts towards the debtor. If the creditor however disputes any part of the plan then the debtor and trustee has to work out a new plan to present to the bankruptcy court which hopefully this time will not be vetoed by the creditor or else they have to make another one again to replace the second plan.

For corporate debtors they are given a closer supervision. There are times when the trustee will take over the operations of the corporation and its assets while the court will also appoint an independent examiner to oversee the corporation’s activities. In some other cases the owner still runs the company but he is no longer the actual owner not until he pays his debts in full. All the company’s shareholders are classified as creditors as well so in essence they are debtors too. The Code gives rights to the individuals and corporation but it can mete out a punishment for those debtors who knowingly hide their assets or lie about the existence of such. The business debtor is free to sell off the assets before filing for bankruptcy but not after that.

Who can file under Chapter 11 Bankruptcy?

• Corporation whether partnership or private
• Business that is not government owned