Chapter 7 Bankruptcy Made Easy

With 2012 now behind us and 2013 here, many people are looking at ways to get a fresh financial start in the New Year. For the millions of people that are buried in debt Chapter 7 Bankruptcy is a leading choice to make this happen. Chapter 7 Bankruptcy, or liquidation bankruptcy as it is sometimes referred to, is a quick way to eliminate unsecured debt. Chapter 7 Bankruptcy can be filed by individuals as well as businesses. The ultimate goal of filing Chapter 7 Bankruptcy and the reason why Congress created it is for the honest hard working American to gain a fresh start by eliminating overwhelming debt.

A typical Chapter 7 case takes about three to six months from beginning to end. I t however begins with the actual filing of the bankruptcy petition at the bankruptcy court. The bankruptcy petition must include a detailed accounting of the debtor’s income and expenses. Proof of income is required by the court in the form of bank statements, pay stubs, and tax returns. All assets and personal property must be listed. A complete list of the debtor’s creditors must also be included so that they might be notified of the bankruptcy case by the court. This part of the bankruptcy case is usually the most tedious and involved for the debtor as much detailed information is required and the petition must be filled out accurately to avoid the case being dismissed. If the debtor has any doubts it is best to hire a bankruptcy attorney to prepare the Chapter 7 Bankruptcy case to ensure that the case goes smoothly from beginning to end.

In the Chapter 7 case some of the debtor’s property may be sold by the trustee so that the proceeds can be divided and allocated to the creditor’s to pay down some of the debt. The debtor in return gets the remaining unsecured debts eliminated or erased. This is the “liquidation” aspect of Chapter 7. It is not very common for a debtor to have personal property or assets liquidated in their Chapter 7 Bankruptcy. This is due to exemption laws which are bankruptcy laws that allow a debtor to keep a certain amount of property that is deemed exempt. The property that the debtor is allowed to keep, or exempt, in the Chapter 7 bankruptcy is determined by the specific exemptions indicated under state law. Bankruptcy exemption laws vary from state to state with some states allowing for more generous exemptions to debtors than others. However, the debtor must file bankruptcy in the state that they reside in. This is another good reason to have the help of a bankruptcy attorney. Bankruptcy attorneys are very familiar with their state’s exemption laws and can use them to the fullest to protect the maximum amount of personal property for their client. The attorney may even feel that it is more beneficial for their client to use federal exemptions rather than the state exemptions to protect the most for their client. Also, if the debtor owes money on a secured debt like a car or a home, the debtor can choose to give up the property in the bankruptcy case and walk from it free and clear with no financial obligations to the lender. The debtor can also choose to keep the property in the bankruptcy case as long as they can afford to continue making the payments and the lender agrees.

Bankruptcy – The Easy Option?

Incredibly, since the changes in the bankruptcy law in April 2004, debtors are more likely to petition for their own bankruptcy rather than their creditors! You would think that most people who have been threatened with the prospect of being made Bankrupt would be riddled with fear of the possibility. It is more widely referred to as the “Big B” rather than the dreaded word itself. However, is this a thing of the past? Since the changes in The Enterprise Act 2002 took place in April 2004 it would appear a lot more people are inclined to petition for their own bankruptcy as a solution to their debt problems.

It appears that more people are choosing to go for Bankruptcy as they think that within one year of a Bankruptcy order being made, they could be debt free. Unfortunately, things might not be as simple as that and it would be wise to find out what options are available before taking the plunge.

In some circumstances, Bankruptcy is the best option, but that is only some circumstances, not all. Even in Bankruptcy, you are still required to make payments from your income for up to three years, if you have a reasonable surplus. The Official Receiver (OR) also has the period of three years (not one year) to stake his claim on your residential home and if there is any equity in your property within that time period, the Official Receiver is likely to claim it.

Considering Bankruptcy?

For some people, Bankruptcy really is the only way out. There are numerous reasons why people find themselves in this situation. If you know you are unable to repay your creditors; you have no assets and there is no prospect of you making reasonable offers of repayment to your creditors, then petitioning for Bankruptcy could be right for you.

What Happens when a Petition is made?

Petition for Bankruptcy is made in one of two ways. Either you will make a petition yourself at a cost of £450, or your creditor will make a petition against you. If a creditor decides to make a petition for Bankruptcy, they would be responsible for showing that you either could not or would not repay the debt owed to them. Unless the petition was significantly disputed, it is likely that a Bankruptcy Order will be made.

Before the legislation changes in April 2004, if a Court believed that you could afford to make reasonable offers of repayments to your creditors, an Insolvency Practitioner would be appointed to look into your affairs and make a report to see if you were willing to make proposals to repay your debt. Your creditors would then be requested to consider your proposals. This has now changed…

If you make a petition for Bankruptcy, the Court will assume you have taken advice and you know you cannot repay your creditors. Therefore, a Bankruptcy order will be made. However, once the order has been made, an Official Receiver will then look into your state of affairs, and if the Official Receiver believes you do have the facility to make reasonable offers of repayment, they may refer you for a Fast Track IVA.

The cost

In order for you to petition for your own bankruptcy, it will not only cost you £450, but, the process will take up a lot of your time and possibly cause you a great deal of stress. Even after the bankruptcy order has been made the Official Receiver (OR) could decide that a Fast Track IVA would be more suitable. If that happens you have basically lost £450 and caused yourself a lot of unnecessary stress.

So what should you do?

Before petitioning for your own bankruptcy, you should get an assessment of your financial situation. It is definitely advisable to get an assessment done before making a petition rather than an Official Receiver making the assessment after a Bankruptcy Order had been made. Companies such as FCL Debt Clinic can offer you this assessment with no charge! You will be informed of all options that are available and if a more suitable route can be taken in order to avoid the implications of Bankruptcy, this will be advised as another way to resolve your situation.

Business Plans Made Easy In Four Simple Questions

Set an Effective Plan for your Business to Succeed

Anyone who’s ever been in business before or has a thorough knowledge of how to run a business is likely to tell you that the first step before starting any business is to write out a business plan. The wise will know that this is sound advice and much to the benefit of the entrepreneur or business owner, but what if you don’t know what a business plan is or how to write one? That leaves a lot of inexperienced entrepreneurs using the old “trial and error process” in starting out their first business.

However, there is very little room for failure in small business and many of those trying to build there own business are mainly driven by the principle of increasing their income. You simply cannot afford to loose your investment, but you’re also left confused – and sometimes even petrified – by terms like executive summary and break even analysis.

What’s the point? Just get out that checkbook, hire a qualified staff, and start selling! How hard can it be, right? Unfortunately this attitude can lead to very risky financial decisions that almost always end in bankruptcy or large debt.

Business Plans Don’t Have to Be Difficult

There really isn’t all that much to a business plan once you break it down. The average business plan is made up of a few key components; for example, the executive summary, financial projections, a break even analysis, profit/loss forecasts, market analysis, and a startup analysis; and takes up anywhere from 20 to 40 pages on average.

You’re Not Having a Drink with a Friend: You’re in Business

The major player in failing to plan is the constant feeling of humbleness from your business domain. When you’re sitting around with a friend having a drink and discussing an idea it’s easy to put a plan into play without ever writing it down. With your business it’s simply not that easy. You need to keep your plan on paper.

This makes things more serious. When you take the time to really analyze what you do and become consistent in following-up on that analysis you are in business. So don’t think of your business plan as a one-time startup effort. Once it’s on paper it will not be put away on a shelf or in a drawer collecting dust. You need to reread, rewrite, and rethink your plan throughout the entirety of your business.

Ask yourself the following four questions before even starting your business plan:

1) Do I know what the purpose of my business is?

2) Can I lucidly describe how my business will work to a total stranger?

3) Who is likely to be doing the same kind of business I’m doing?

4) Who is likely to be interested in my business and what I sell?

If you can answer these four simple questions then you already have enough information to start writing your business plan. These questions are basically identifying who you are (as a business), what you do (or what you plan to do), where your market is, and what chance you stand (if any) of competing in this market. This lays out the standard foundation for you to be able to evaluate weather or not the way you plan on conducting your business is going to be a good investment and time-well-spent or your worst financial and psychological nightmare.

Notice here that I used the phrase “the way you plan on conducting your business” and not “the business you plan on conducting”. Any business is feasible given the right circumstances so our objective here is to determine a means to feasibility and not necessarily the feasibility itself (which is likely to be endorsed by a more detailed feasibility report).

Let the Plan Take Its Course

Your business plan is not at all complicated and shouldn’t be viewed as a tedious process or avoided in any way. If you find something in your plan isn’t working then perhaps it’s time for a change. After all that is what the business plan is there for. If you didn’t write your plan down and keep track of changes, how would you know what works and what doesn’t?

Take the time to put your plan down on paper. There are plenty of free resources online and offline to help you put together your business plan. You can ask your local bank for a standard business plan template or get one on the Internet in minutes.

You won’t have to fill out the entire plan right away. Certain parts may take longer than others and it’s not a sequential process. Start with what you know first. Leave the executive summary (or description of your business) for later when you’re clearer about your business identity. Leave things out, or incomplete, if you’re unsure and fill them in later, or go back and make changes, when you have more information. It may not be pretty at first, but it is there to keep you focused. It also provides those people most interested in your business (such as you, your partners, shareholders, or investors) with concise and up-dated information about your business and the direction in which it’s heading.