All You Need To Know About Personal And Business Bankruptcy

If the thought of filing for bankruptcy scares you, then you are surely not alone. A person or business with a huge debt looming large over them will think and consider the option of filing for bankruptcy. In some situations, it becomes a choice that is extremely necessary. Filing for bankruptcy ensures that even if you are in dire straits financially, you can still have a choice of options. You must know that there are both advantages as well as disadvantages of filing.
What is bankruptcy?
Bankruptcy is a set of federal laws that enables individuals as well as businesses to repay the money that they owe to their creditors. It helps them to clear all their previous debts so that they can make a new and fresh start financially.
Bankruptcy was created with the intention of helping honest debtors by giving them a chance to create a better financial future without any pressure from their creditors.
Types of Bankruptcy:
• Chapter 7 Bankruptcy:
This is also called ‘liquidation’ bankruptcy and it can be filed by both individuals as well as businesses. This process can last up to three of four months and it can help you get rid of your unsecured debt such as personal loans, medical bills or credit cards.

It involves liquidating all your non-exempt assets and this is used to pay the money to your creditors. It is a good option if you have a large amount of unsecured debt and not much income.

• Chapter 13 Bankruptcy:
This is also called ‘reorganization’ bankruptcy and it can take a period of three to five years to complete. It helps to reorganize your debt by setting up a repayment plan. This ensures that you pay the money to your creditors over time.

This does not involve liquidation of your property. It is a good option if you have a regular source of income to make the monthly payments regularly.

• In addition to the above options, there is an option called the Chapter 11 Bankruptcy which applies to some creditors. It is usually used by businesses that are struggling financially to repay their debts.
When should you file for personal bankruptcy?
• If you are using credit cards to pay for your basic needs:
Not having cash to buy necessities that you need every day can be a sign of a huge amount of debt. This would lead you to pay for all these things with your credit card. Doing so will further increase your troubles due to the interest.

• If you are using one credit card to play for another credit card:
This temporary solution can get out of hand easily. It is not a problem doing this occasionally. However,doing this regularly will increase your debt significantly.

• If you have a second or third job to handle:
If taking up an additional job is helping you clear your debt, then it is a good solution. But if working for an additional amount of time is not bringing your debt down, you would need to think of more strict measures.

• You are dealing with high interest rates:
Missing one or two payments on your credit card gives the company to increase your interest rate. As they do this, most of the time the amount you pay only helps clear the interest amount, leaving the principal amount untouched. In addition to this if you are not able to negotiate with your lender for a lower rate, then bankruptcy is a good option.

• The alternative methods are not working and it is stressing you out:
If none of the alternative methods work to bring down your debt and the stress is causing your life to suffer, you should consider bankruptcy.
When should you file for business bankruptcy?
• If your assets are at risk:
Small business owners must consider bankruptcy if their personal assets are at risk. Since these small businesses operate as a sole proprietorship they face greater risk compared to other business entities as their personal assets are exposed.

• If there is no separation between personal and business finances:
This is another situation where the business owner’s personal assets can be at risk. Not having a separation between personal and business finances means that the court could see it as just one single entity. Bankruptcy can help to protect you if your business does not work out.

• If your business is losing money:
If your otherwise profitable business is facing a tough time temporarily, you should give it some more time. But if your business is losing money consistently, then it may be time to consider bankruptcy.

• If the liabilities are more than the assets:
Running a business where the liabilities are higher than the assets is not a smart decision. Bankruptcy may be the solution is such a situation.

Whether you are an individual or business who needs to file for bankruptcy it is very important to have all the correct information and resources to complete the process. It is important to seek the right professional help to carefully evaluate your financial situation and give you the best possible advice. The process of filing bankruptcy in Green Bay, WI is made very simple due to the efficient bankruptcy attorneys available there.
Filing for bankruptcy will not end all your financial troubles instantly but it will give you a chance to change your financial future for the better. We hope this information helps you to take a correct and well informed decision.