Straight Bankruptcy & Wage Earner Plan
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Suggestions to overcome Financial Misfortune
As far as, my opinion is concerned, to overcome financial misfortunes she should take help of numerous expert professionals like mediators, career counselors, social workers and insurance adjustors; as these trustworthy resources provide secrets of personal crisis management and the tactics for overcoming misfortunes. Second most effective way to combat such situation is filing a Bankruptcy. It is a legal proceeding through which a person seeks out relief from those debts that he or she can’t pay. Bankruptcy is under a law that was designed to resolve severe problems related with debts and to facilitate a new financial start. Bankruptcy eliminates debts like rent, utility bills, deficiency balances (the difference between the amount payable and the value of the property), loans from friends and relatives, credit card debts and legal, medical and accounting bills.
Straight bankruptcy, which is very common, is also known as liquidation proceeding. Filer of bankruptcy relief is known as a debtor. Debtor’s property is sold by the trustee and the sales earned from it are used to make payments to the creditors in a straight bankruptcy. Another special type of bankruptcy is Chapter 13 bankruptcy or wage-earner plan. In this type of bankruptcy, person pays off debts underneath an installment payment plan of trustee.
Straight bankruptcy and wage-earner plan bankruptcy
Straight bankruptcy |
Wage-earner plan |
Straight bankruptcy is used by the people who have steady income and have few assets |
Wage –earner plan is used by persons who have regular incomes; Less than $250,000 in unsecured debt and less than $750,000 in secured debt. |
Most of the debts are eliminated in it but it also needs immediate liquidation of all the assets |
It recognizes debtor’s assets rather than liquidating them. |
An individual cannot file bankruptcy for 6 years after declaring Chapter 7 bankruptcy. |
There is no such limitation of filing for Chapter 13 protection. |
References
Pandey, I.M. (2007). Financial Management. New Delhi: Vikas Publishing House.
What is bankruptcy? Retrieved April 3, 2008, from
http://www.utahbar.org/bars/slcbar/html/bankruptcy.html
Bankruptcy ¾ Fresh Start OR Big Mistake? Retrieved April 3, 2008, from
http://www.in.gov/dfi/education/MiniLessons/BANKRUPTCY.doc
