Filing For Bankruptcy Is The Inability of Debtors To Pay Their Creditors

Written by Adam Peck Category: Nursing Homes January 23rd, 2013 3 min read

Filing for bankruptcy could be one of the most difficult decisions to make considering the dent that it leaves on the debtors’ credit standing for the next seven years. However, it could help you to save your home from a possible foreclosure; put an end to the harassments caused by creditors as well as provides an opportunity to restart your financial life anew. For those of you considering applying for a File Chapter 7 Bankruptcy or Chapter 13 bankruptcy procedures, it is imperative to know that bankruptcy is a lawfully declared inability of debtors or business houses to repay back their creditors. And hence when you are out to get a bankruptcy consultation make it a point to ask chapter 13 or chapter 7 bankruptcy questions to your bankruptcy attorney which could help you to know what kind of a bankruptcy process you qualify for.

Under tenets of the new bankruptcy law or the “Bankruptcy Abuse Prevention and Consumer Protection Act of 2005,” debtors with a higher income could find it difficult for a chapter 7 bankruptcy (liquidation) as they are required to pass the “means test” that aims to determine the disposable income available with the applicant after subtracting the expenses permitted by the IRS which does not include the actual expenditures. If the additional income exceeds certain pre-determined limit, you could most likely qualify for a chapter 13 bankruptcy and not a Chapter 7 Bankruptcy Information . A critical understanding could help you to know that chapter 13 bankruptcy laws are distinctly different from those of chapter 7 bankruptcy laws, which enables debtors to wipe out their total dues in full and get a fresh lease of financial life, in the sense that you could be required to repay a significant portion of all your unsecured debts over a 3 to 5 years period.

The interpretation of the new bankruptcy law in practice would ultimately depend on the courts as cases proceed through the system. This only further necessitates the need for chapter 7 bankruptcy protection for distressed debtors. For this it is important for troubled borrowers to get legal help from bankruptcy attorneys who could fight on their behalf to protect their rights and properties. Another critical aspect is that the new bankruptcy law requires all probable bankruptcy applicants to undergo compulsory credit counseling for managing budgets and debts..

The new bankruptcy law of 2005 stipulates probable bankruptcy filers to undergo credit counseling prior to applying for a bankruptcy under either chapter 7 or chapter 13. To qualify for a chapter 7 bankruptcy process, you are required to pass the “means test”.

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Written by Adam Peck

Expertise: Personal Injury

Adam J. Peck, ESQ is a principal with Peck Law Group, APC. In 2008, Mr. Adam Peck received his Juris Doctorate from Whittier Law School where he graduated Cum Laude. His practice is primarily dedicated to representing Elders, Dependent Adults, along with their loved ones and family members, who have suffered horrific personal injuries.