Tuesday, February 3, 2009
BANKRUPTCY – AN OVERVIEW
Bankruptcy is a process through which a person get rid of whole or part of the debts that he or she need to pay to his or her creditor. It protects an individual from any legal action undertaken by the creditors or lenders due to non payment of his or her debts. In certain cases bankruptcy also allows a person to opt for a repayment plan under court’s supervision to pay back the debts that the person owes. Bankruptcy depends on certain criteria. They are:Once a person is declared bankrupt, within fourteen days of the declaration, court emails the creditors with the details regarding the trustee’s name, automatic stay, date for meeting with creditors and also with the case number. In the next 20 – 40 days the court arranges a 341 meeting with the creditor and with the trustee. After 30 – 40 days of the filing, the trustee checks whether the assets can be used to pay off the creditors. If the filling is falling under Chapter 7 and the assets are protected as per bankruptcy law then a report of no distribution will be filled at the court. But if the assets are non exempted one then the trustee will sell the assets to clear the dues. In case of Chapter 13 the court appointed trustee checks the repayment plan prepared by the debtor.
Bankruptcy helps a person to start afresh by erasing the debts. But Chapter 7 gives a negative impact on the credit report. Where as Chapter 13 has a positive effect as here a person can repay his or her debts.
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