What Is Bankruptcy
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When an individual or a business becomes incapable of making payment to creditors due to excessive debt obligations, they can seek for a special protection. Bankruptcy is a court-ordered protection, which results in cancellation of a majority of the debts of the defaulter. Typically, defaulters have to either sell off their assets or setup a structured payment plan to obtain bankruptcy relief. They also need to know the answer to the question “what is bankruptcy petition” so that they know how to file it properly.[br]
What is Bankruptcy Petition?
A bankruptcy petition is an application made by a debtor or a creditor(s) to a bankruptcy court for declaring insolvency. All debts acquired before filing a petition can be claimed for discharge under bankruptcy protection. Any debt obtained after filing the petition is inexcusable.
Filing a petition is about more than just completing a form. It requires a thorough understanding of special bankruptcy rules and exemption. Although several self-help bankruptcy filing kits are available in the market; one must consider hiring a professional like a bankruptcy attorney or a petition preparer for the same. Such professionals enable a defaulter to optimize bankruptcy exemptions and save valuable assets from seizure.
What is Bankruptcy Hearing?
Bankruptcy hearing is an appearance before a bankruptcy court for the purpose of contesting the validity of a bankruptcy petition, leading to either approval or denial of the petition. If a debtor is a victim of involuntary bankruptcy, which is forced by creditors, s/he may dispute it during a bankruptcy hearing. For this, s/he must present a summary of income and assets, with a synopsis of a projected payment plan.
A designated judge is responsible for creating the structure and defining the number of bankruptcy hearings. Creditors are not legally obligated to be present at a bankruptcy hearing. Moreover, some jurisdictions excuse debtors from attending the session; requiring their legal counsel to present their case instead.[br]
What is Bankruptcy Dismissal?
Bankruptcy dismissal is rejection of a bankruptcy petition. After reviewing a defaulter’s asset, income and debt status in a bankruptcy hearing, a judge may establish that the defaulter is capable of meeting his/her debt obligations. If such a conclusion is established at a hearing, a debtor is counseled to hunt for other alternatives to bankruptcy like debt negotiation and reduction. However, if a debtor feels that such bankruptcy alternatives are infeasible, s/he may consider re-filing the petition.