Following the financial crisis, the risk management policies of financial institutions are under greater scrutiny. Although banks have always had a duty to control risks - in part through loan evaluations - financial institutions must more effectively identify loans that are at high risk of default and take actions to avoid losses whenever possible.
The Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) amended the U.S. Bankruptcy Code in 2005 as part of a widespread overhaul of the system. The BAPCPA put into place new eligibility requirements for obtaining Chapter 7 bankruptcy protection. The provisions make it tough for individuals who have acquired mainly consumer debts, but who earn an above-average income for a household in Minnesota of similar size. The formula for determining Chapter 7 eligibility is called the means test.
The Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005 amendment to the U.S. Bankruptcy Code imposed additional burdens on debtors filing for bankruptcy protection. BAPCPA includes provisions that require debtors to obtain credit counseling and debtor education as part of the Chapter 7 and Chapter 13 bankruptcy processes.
For struggling small business owners, the distinction between personal bankruptcy and business bankruptcy can be of tremendous importance. Depending on the organizational structure of your business, that distinction may be difficult to make. While bankruptcy can be a powerful tool for giving hardworking but struggling business owners a second chance, it is crucial to understand what impact business bankruptcy may have on your personal finances, and vice versa, before embarking on the process.
The court appoints an impartial third party referred to as the trustee. It is the trustee's job to examine your case, determine if you are eligible for relief according to the chapter under which you filed and determine if there are any assets available to pay creditors, including any assets you may have that are not otherwise exempt. For example, your equity in homestead is exempt property up to a certain value. If there is any value beyond that figure, that excess equity is considered an asset. A trustee who locates assets has the right to seize and sell them to use the proceeds to repay a portion of your debt. It is rare for you to not be able to exempt your assets and if you do have assets beyond your exemptions, the trustee usually will allow you to pay a sum to keep the assets.
If you are considering filing for bankruptcy, you may think that your friend or family member who cosigned a loan for you is legally excused from the loan if your debt is discharged in bankruptcy. Unfortunately, this is not the case.
The need to file bankruptcy can arise more than once throughout the course of your life. Repeat filing is not uncommon. Once back on your feet, you may have ventured into self-employment or faced a devastating illness. Regardless of what path led you to need to seek bankruptcy relief more than once, it is important to know what relief is available to you a second or third time around.
Filing complete and accurate bankruptcy petitions, schedules and statements is important - this is how the court evaluates your financial situation and determines the length and outcome of your case. However, if errors to your original documents or changes in your circumstances need to be addressed, bankruptcy court does allow you to file amendments. It is important to maintain the highest standards of transparency throughout your bankruptcy proceeding, so if you need to make changes to forms, do so as quickly as possible. Remember, your bankruptcy papers are signed under penalty of perjury.
People have bad debts - that does not make them bad people. The majority of bankruptcies result from situations beyond the debtor's control. While the idea of bankruptcy can be frightening, in some situations, it is the opportunity you need to get back on your feet and start afresh.
People facing bankruptcy are often afraid that they can never qualify for credit again. The knowledgeable bankruptcy attorneys at Hess & Jendro Law Office, P.A. can assist with post-bankruptcy financial strategies.