Bankruptcy

Say No to Business Bankruptcy

2007-05-24T11:46:00.000-07:00

When your business runs into troubled waters where you have borrowed money, incurred huge debts and are now unable to repay these obligations, the instant solution that comes to mind is that of filing for Business Bankruptcy. The lure of starting afresh, after seeking solace in Chapter 11 is always more appealing than trying to find means to clear the debt trap that you have fallen into.

However, no matter how grave the consequences, it is often better to say no to Business bankruptcy. Bankruptcy should be considered only as a last resort and out-of-court restructuring alternatives should be given a thought.

The primary reason, people avoid filing for bankruptcy is that it will lead to them losing direct control over their business. Once you start functioning under the umbrella of Chapter 11, there will inevitably be other creditors and new masters ready to take on your share of control as well as decision making powers. The company will be put under tremendous constraints which many third parties like vendors, landlords, service providers etc who have a vested interest may start acting on, as well. Moreover, the debtor will have to start explaining how and why so many things are being done while at the same time have to seek the court’s approval to succeed.

Another important feature of filing for business bankruptcy and the reason one must try to avoid it is the expenditure it incurs. Not only does it take too long to get all the procedural matters sorted out, but it turns out to be a costly affair. A bankrupt company will need to find expert legal counsel, the rates of which may truly be unaffordable. Additionally there will be business advisors, filing fees, administrative expenses, all of which can run up a huge tab.

The resolving of bankruptcies can take far too long which tends to be another reason to avoid them. Moreover the process is slow, tedious and cumbersome. The management will be obligated to spend a significant amount of time planning for and attending court hearings to get the approval of actions that they want to take — and therefore ending up spending little time actually running the business. This may lead to lost opportunities in business, another chink in the armor of bankruptcy.

The long drawn out process of bankruptcy laws combined with the uncertainty it accords, also leads to employee dissatisfaction and low employee morale. This may lead to high attrition rates, which in turn lead to high attendant costs. Hiring and training new employees increases the burden of costs and reduces motivation levels considerably.

Given all the above factors, bankruptcy is a risky decision. Obviously, the reorganization of a company under Chapter 11 is designed to create a fresh start and preserve or enhance business opportunities, but often the process can be quite damaging, perhaps as much as the initial problem and reason of bankruptcy.

Certain industries and businesses are totally averse to filing for bankruptcy. Companies, typically, in the large-scale, long-term construction industry are not good candidates for Chapter 11. One reason for this is the risk of continued payment or progress billing for the work being done. Another reason is that subcontractors may have the right to lien property if they are not fully compensated. Thus, the potential benefits that may accrue as a result of the debtor company being able to avoid immediate payment for certain pre-petition obligations are greatly limited. Lastly, it is difficult for a debtor in the large-scale company contracting business to bid for and win new businesses when under the Chapter 11 clause. Most potential bidders are likely to turn their backs on such cases.

An out-of-court restructuring alternative should be considered as opposed to business bankruptcy as it is not only attainable, but because it can be done relatively faster, with less extraneous activity as well as less expense. Also, because a company is dealing directly with its most important creditors it tends to be a better option. While the pool of interested parties becomes smaller, it also means that the financial losses are not shared as equally as it usually is in a Chapter 11. In these situations, solid planning and communication with the major stakeholders is critical. All in all, business bankruptcy may not be the best solution to a company under-performing. It should be taken only as a last resort solution only when all other options are exhausted.

William Brister http://www.legalproguide.com/ - An Answer to All Your Legal Needs.
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Bankruptcy: What To Expect If You File For Bankruptcy

2007-05-23T11:43:00.000-07:00

First, understand that filing bankruptcy should be a last resort if you have borrowed money and have absolutely no way or repaying it. Filing for bankruptcy will have a negative effect on your credit history for 10 years or longer and may also adversely impacts your quality of life.

If you do declare bankruptcy, here are some things to expect. First, you will need to be prepared to explain to a bankruptcy judge or trustee how you got yourself into such a financial pickle. You will be asked some very tough questions and need to be ready with good answers. It will not be an easy or fun task.

The only credit cards you will probably be allowed to keep are those that were completely paid off before you declared bankruptcy. You will most likely lose all others.

Once you file for bankruptcy, you will have trouble getting a mortgage, a loan, new credit cards, life insurance and even some jobs. This is because there are employers who are skittish about hiring people who have filed for bankruptcy as they feel it demonstrates a lack of restraint or self-discipline.

Some of your debts will not be discharged. This includes child support, student loans and back taxes. So if you think filing for bankruptcy will relieve you of that $12,000 you owe Uncle Sam, think again.

Keep in mind that a bankruptcy will stay on your credit report for at least 10 years. This means that if you’re 35, you’ll be 45 before you can apply for a credit card, a mortgage, a loan or a job without the potential lender or employer seeing that you were once bankrupt.

The good news

Despite what you may have been told, it is possible to get a loan after filing for bankruptcy. It is called a bankruptcy loan and its purpose is to help you get back on your feet and reestablish your finances.

A bankruptcy loan is usually available only after your creditors have been paid and your bankruptcy dismissed. If you filed a Chapter 13 (reorganization) bankruptcy, your creditors must be paid in full before you apply for a large loan. And if you filed a Chapter 7 bankruptcy, you must wait at least two years after the bankruptcy to apply.

The best way is to prove to potential creditors that you are no longer a bad risk is by paying all your bills on time, and showing that you can now handle a credit card. Once you have a track record for paying your bills on time, and have successfully maintained a credit card, you can ask your creditors for reference letters to prove to potential lenders that you have become credit worthy.

You should also know that there are lenders out there who will offer you a loan while you are still in bankruptcy as a way of paying off your creditors. Don’t be lured into this. It usually just paves the way for further disaster as you are simply adding debt to debt. As a wise man once said, you just can’t borrow your way out of debt.

Going through bankruptcy can be a painful and embarrassing experience. Be sure you consider all possible alternatives before filing. You might find that bankruptcy is easy to get into but very, very difficult to get out of.

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Douglas Hanna has lived in the Denver area for nearly 35 years and is an expert on both Denver and Colorado. He is also the author of more than 120 articles on Denver and Internet marketing.
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Bankruptcy Filing - Secured Debts, Unsecured Debts

2007-05-22T11:40:00.000-07:00

Prior to filing for bankruptcy you should consult with a lawyer regarding changing laws. The newest bankruptcy laws went into effect during 2005 and have made the filing process more difficult and expensive. A new provision to the bankruptcy law stipulates that a person must meet with a credit counselor and attend money management courses before their debt is discharged.

If you are contemplating filing for bankruptcy you should be aware there are two types of bankruptcy, Chapter 7 and Chapter 13, and each has its advantages and disadvantages. You should also familiarize yourself with the difference between secured and unsecured debt, as this will help you to protect your most valuable assets during bankruptcy.

WHAT IS CHAPTER 7 BANKRUPTCY?

Chapter 7 bankruptcy is intended to give people a fresh start. Assets are liquidated and used to pay creditors, although if you do not have assets of real value there is a chance to have your debt removed without giving much to the credit card companies. The new law makes filing for Chapter 7 more difficult because if your income is above your state's median, and a judge determines you are financially able to pay at least twenty-five percent of the unsecured debt you will not be allowed to file.

WHAT IS CHAPTER 13 BANKRUPTCY?

You can make an appeal to the court that you have special circumstances, such as a natural disaster or severe illness, which further prevents you repaying the debt but most lawyers at this point will advise you to consider Chapter 13 bankruptcy. Chapter 13 bankruptcy puts you on a repayment plan with the creditors for a period of at least five years. The interest rates are often much lower than the original debt, and you are not responsible for debt unless it is specifically stated in your repayment plan. Under the new law courts will apply pre-set standards determined by the IRS to compute how much money you should allocate towards housing and food, and how much money you should have left to pay off your debt.

WHAT IS SECURED DEBT?

Once you and your lawyer have determined how you will file for bankruptcy, you should begin itemizing your assets and labeling your debt as secured and unsecured. Secured debt is credit given to you based on the value of the property you bought, such as a car loan. Should you fail to make payments the creditor with a secured interest in the property may have the item seized, and if the item is now worth less than your debt the creditor may sue you to make up the difference.

WHAT IS UNSECURED DEBT?

Unsecured debt is credit given to you solely on your promise to repay at a later date. An excellent example of unsecured debt is a credit card. Failure to pay unsecured debt may cause the creditor to obtain a judgment against you, and once this happens there is no hope of protecting your assets until your debt has been settled.

A creditor may obtain a judgment against you if your debt has remained unpaid for a long period of time, the balance of the debt is very high, or a combination of both. Once a judgment is obtained you are forced, by law, to pay back the debt you owe. To achieve this goal the creditor may request TO garnish your wages or even put a lien on your house to satisfy the debt.

HOW TO ITEMIZE YOUR ASSETS TO PAY DOWN DEBT

When itemizing your assets you should consider the value of your property in terms of what you could sell it for. Some debts such as your mortgage and taxes will not be absolved after you file bankruptcy, and you may consider selling some of your assets to pay down on these debts. Once you have taken stock of your assets, you can determine which of these assets are considered exempt property and untouchable by creditors.

Some states have very liberal homestead exemptions which allow you to keep a certain amount of your equity which will allow you to rebuild after declaring bankruptcy. States such as Florida and Texas allow you to keep all the equity in your home, whereas states like Alabama only allow you to retain the first $5,000. In states with more liberal homestead exemptions it may be to your benefit to use liquid assets to pay down on your equity. You can also refinance the equity from your homestead exemption and use the money to pay down on your unsecured debt.

OTHER LEGAL OPTIONS TO PROTECT YOUR ASSETS DURING BANKRUPTCY

Other legal options for protecting your assets during bankruptcy are making annual contributions to your IRA or other pension plan. It is important to consult with an attorney to make sure your pension plan complies with federal standards for bankruptcy exemption before you move any funds from existing accounts. You may also tie up money by purchasing additional life insurance, obtaining an offshore annuity, or by gifting certain assets.

If you choose to transfer ownership of your assets, make sure this transfer is permanent since you are taking an oath when you file bankruptcy that you have accurately presented all of your assets for consideration in repaying debt. Your actions within the last ninety days before you file for bankruptcy will be highly scrutinized in court, and any suspicious activity may result in a denial of your case.

author bio - Rocco Beatrice, CPA, MST, MBAaward-winning estate planning, trust expertMS - Taxation, Master of Science TaxationMBA - Management / TaxationBSBA - Management / AccountingCPA - Certified Public Accountant-----Irrevocable Trust, Asset Protection, Estate Planning Grantor Trust71 Commercial Street #150, Boston, MA 02109tel: +1.508.429.0011 fax: +1.508.429.3034
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Life After Bankruptcy: 7 Tips To Get Your Life On Track After Bankruptcy

2007-05-21T05:55:00.000-07:00

A life in bankruptcy is not an unbearable phase if you look at it from a positive angle. If you found it unbearable, I'm sure you won't want to go through it again. While the court 'reorganizes' you by selling your personal assets to pay off your debts, so too you must reorganize your thoughts and look forward to live a life of prudence.

Here are 7 tips you can apply to get your life back on track as soon as possible so that you can find a way to return to a lifestyle of less financial worries and gradually break free from the shackles of an unpleasant past.

1) Seek sincere help. In modern societies where urbanites get too busy in their own lives, it is not surprising to have people whom you know suddenly turn their backs on you when you seek their assistance. It's like they are thinking, "I can't believe it. I've never been a bankrupt so why are you so deep in the dumps?" Forget about these people. Your immediate family will be the first to know your situation and only they can give you continued love and support. Make a checklist of names and how they can help you as much as what you can do for them, as well as (very) close friends whom you know can depend on.

2) Be responsible. And I mean REALLY responsible. Once bitten twice shy; don't get mired in debt again. You can blame on exorbitant increase in the cost of living, that business partner who sued you or the failing stock market but they are not going to say sorry anytime. It's time to take a critical look at your spending habits and evaluate them, understanding where you have wasted and invested your money. Do a monthly plan-and-review for your savings and expenditure. A very good hint of wastage is putting your money in places you don't know much of. Learn how to disengage from risks which you can't afford to get involved.

3) Get paid work immediately. Get your life productive again. There is no more greater blessing than learning to appreciate your ability to earn your keeps. Within your checklist, you should have a couple of people whom you can approach in this area. Leverage on your experience and expertise to make an offer of what you can contribute to their benefit.

4) Join a credit union. Such helpful organizations can offer loans which normal institutions like banks will not do otherwise, but make sure there's confidence on both sides that you can repay the loan.

5) Far too many people never had a concrete financial/retirement plan even though they know it's important. Engage a financial advisor to be your personal counsel. Set aside cash reserves for rainy days or emergencies. Find adequate insurance to protect your remaining assets and family. Avoid high-risk ventures or 'investments'.

6) Keep track of all debts due and paid to your creditors. Make sure your credit report is updated for the record.

7) Sharpen your financial literacy. Robert Kiyosaki, author of "Rich Dad, Poor Dad" is a strong advocate for personal fiancial education. You can always pick up financial literature along the way and think about how you may change the way you look at your wealth. You never know how truly rich people think differently about their money from the rest of us.

As the saying goes, "Time heal all wounds." It will take years to be a 'normal' person again, but once you know you have attained the discipline to practice good habits, there's no reason how you can fall back to the old self. As you become wiser, you can better inform others about the unhealthy influences of commercialism and consumerism.

Justin Koh is a freelance writer whose articles have appear in most major ezines. You can find more of these at: http://www.bankruptcycentral.info

Should I Use a Bankruptcy Lawyer?

2007-05-20T05:53:00.000-07:00

Often times when people are filing for bankruptcy, they believe that it is an easy process that they can do on their own. To their surprise, the process ends up being much more complicated than they ever imagined. There are new laws happening all the time that continue to complicate the bankruptcy process. Bankruptcy lawyers are familiar with the flaws and are able to inform their clients of all the necessary requirements when filing for bankruptcy. Although bankruptcy lawyers do cost money, they are often well worth the expense.

When someone decides to file for bankruptcy on their own, there are many mistakes that can occur. One of the most significant mistakes is when someone fills out the required paperwork incorrectly. This type of mistake is very common for people filing for bankruptcy on their own and it is often the cause of having their bankruptcy case thrown out of court. If you're bankruptcy case is thrown out of court, this may cost you more money then hiring a bankruptcy lawyer would have in the beginning.

Some people have been given the advice that if they cannot afford a bankruptcy lawyer, they should hire a paralegal to fill out their legal forms for that. They often believe that a paralegal will prevent mistakes from being made and prevent their case from being thrown out because of paperwork being filled out incorrectly. The truth is, apparently goals are often very expensive and charge for each form they fill out. Apparently goals are also not able to represent you in a court case. Instead of spending your money on a paralegal, your money will be much better spent on a bankruptcy lawyer.

Most people will find that they should use a bankruptcy lawyer. A bankruptcy lawyer has gone through several years of training to become a lawyer. Through this process of becoming a lawyer, they have learned all the ins and outs of the legal system, which will enable them to provide the legal advice necessary for your bankruptcy proceedings. Lawyers that specialize in bankruptcy have often spent several years in the field and are able to offer in-depth advice to each of their clients.

Since you will be paying money for your bankruptcy lawyer, it is important to come prepared to every session with them. Do your own research on bankruptcy and have fewer questions prepared ahead of time. Also, ask your lawyer if there is anything you can do to reduce their fees. It may be possible for you to do some of the legwork on your bankruptcy filing on your own. Discuss this option with your lawyer at your initial consultation. That way, your bankruptcy lawyer will know that it is financially difficult for you to pay them and you are willing to do anything necessary to reduce their fees.

Don't let the pressure of bankruptcy get your spirits down. The first steps you should take is get a free credit report. Try to pay off as many creditors as possible, ask creditors if they will settle for a lesser amount, if you cannot avoid a bankruptcy seek the help of a professional. http://know-your-credit-score.com/

Bankruptcy and after Bankruptcy Services

2007-05-19T05:51:00.000-07:00

When people decide to declare bankruptcy they think that they are going to go into court and tell a judge that he has too much debt and he can’t pay it and the judge will say ok, your bankruptcy is discharged. Well, that has never happened before and it is certainly not going to happen now. The laws as of October 2006 have been changed; it is no longer that easy to have all of your debt disappear. It is very difficult that you will get a Chapter 7 discharge. Courts are cracking down on people who are just simply over spending.

With the new laws, you have to go to credit counseling and then take a means of income test. arWith the changes in the laws, the best thing that would happen is that you file for Chapter 13 bankruptcy which allows the debtor to reorganize a debt to be paid. So you will be paying off the debt. Instead of going through the pain of bankruptcy and the mark on your credit record, you can try to go to a credit counselor your self.

What this does is that it allows you to pay back the debt without declaring bankruptcy. Your credit counselor can make arrangements with your creditors to possibly lessen the amount of debt almost like a settlement and then your monthly payments would be lowered on all of your debts because the credit counselor takes all of your bills and then they would chge you one fee instead of a fee for each creditor. Speak to a counselor and see if you can get a deal that you can afford.

After you have filed for bankruptcy you may begin to establish your credit again. The bankruptcy is on your record for about 10 years, so the quicker you begin reestablishing your credit the better of a position you will be in. One way to reestablish your credit is by getting a secured credit card, these cards you have to pay from the balance of the card in order to get one.

For example, if you apply for a secured card, they may require a down payment from the line of credit extended to you as one time charge. The limits on these cards are very low, so you have to think if that is something you want to do right away. You will owe before you buy anything, but as you make these payments it is reported back to the credit company how you are doing and you could see improvement in your credit score very shortly. Another way to reestablish your credit card is by purchasing a prepaid cell phone, you may think that has nothing to do with credit but most phone services for a small fee like $ 10 a month will sent a report to the credit agencies reporting good credit if you don’t let the phone go over the minutes.

The same thing is offered from those prepay credit cards, the kind you see in CVS and Rite Aid. These things will slowly increase your credit score until someone offers you the first unsecured card and you just have to be careful not to over spend so you can continue the good line of credit.

Oral Nicholson wants to show you how to get your credit back after bankruptcy and will show you proven techniques and statergies to get you out of debt without bankruptcy. For bankruptcy information visit http://www.filing-bankruptcy.info

How To Get Great Advice On Filing Bankruptcy

2007-05-18T05:49:00.000-07:00

Debt can be a burden to anybody, but is filing for bankruptcy right for you to relieve the pressures of this debt? Thinking about bankruptcy can be quite a stressful thing! You can probably feel a full blown panic attack coming on, how could you let things get this bad? Most people react in the same way, what you need to do is take a step back and relax. This information is not legal advice, but it could help you to decide whether or not filing for bankruptcy is right for you.

The first thing that you need to do is take a look at your debt and assets. Start by making a list of all your monthly expenses, start with your mortgage or rental payments. Then put the car payment, then carry on down the list in a similar fashion. Don't include things like credit cards, and loans. Just include day to day living expenses, the things that you cannot do without.

After you've worked out how much you need to spend every month try to work out if it's possible for you to repay the loan in full (including any interest) within three years with the disposable income that you have left. You should forget the minimum payment due figure and pay off the amount that would leave you debt free after three years. If you are struggling with these calculations then take a look on the internet, there are many tools online that can help you to work out all of these figures.

Now you should take a look how you can increase your cash flow, to do this you can reduce monthly outgoings, or taking a second job. Reducing monthly expenditure is a great place to start, you could reduce the number of nights that you go out, and lower the thermostat on the boiler so it's more efficient.

If you have used all of these steps before and are still experiencing problems then maybe it's time to call in the professionals. Professional credit councilors will be able to assess your individual case and find out if filing for debt repudiation is the right thing for you to do. Whenever asking for help make sure you are cautious, many of these so called professionals can actually cause much more harm than good! The best way to find a trustworthy councilor is to contact the state and federal courts for debt repudiation, these have a list of approved councilors.

Filing for bankruptcy is often a very difficult decision, but if you can't pay off your debts within three years then perhaps it's the only path available to you.

You can also find more information on Chapter 11 Bankruptcy and Personal Bankruptcy. Filingpersonalbankruptcyhelp.com is a comprehensive resource to get help in Bankruptcy.