Signing in for a bankruptcy is the last resort for a person who has borrowed some amount of money and is in no means of paying the debts made. Filing for bankruptcy can cause both mental and emotional burdens to a person and so with the debtor’s credit history.

When one declares bankruptcy, one should get ready for deliberate explanation to a judge or trustee how he get himself into such a situation. The person in one way or another might lose any credit card he has unless he has already paid for it. After declaring economic failure, one can have a hard time re-applying for mortgages, loans, credit cards, life insurance and even some job, so one should get ready to rebuild his credit.

So, before putting yourself to such situation, think thoroughly first, it would be easy to get yourself in such situations but is hard enough to get out of.

There are different types of bankruptcy the two most commonly applied by many are the, Chapter 7, which is the type of bankruptcy which is the person in debt must petition the court to be freed from all debts following the liquidation of virtually all assets. Usually your house can be spared from this type of liquidation.

Another is the Chapter 11 bankruptcy, a type of bankruptcy, which is less severe and allows the person in debt to remain in possession of his assets. A repayment schedule is negotiated with creditors as an alternative to asset liquidation. The company can cancel all the debts made by the person in order for them to make a new start. Now, we will be tackling more about this type of bankruptcy.

More often than not, the Chapter 11 bankruptcy does not have any amount of debt limitation unlike Chapter 13.

Usually this type is most likely applicable to corporations and partnership because they can still go on with their business. A person per se can also dig in to this condition although it will seem too complex and expensive to pursue by an ordinary person.

Chapter 11 is called the reorganization bankruptcy because a person may be allowed to propose a plan of reorganization or repayment so that they can continue with his business while paying for his debt.

This is neither harsh compared to other forms nor methods which will require the debtor to sell all his properties and to repay the credit at any stake. In this process, the debtor is permitted to postpone all payments so that he or she can put himself back to rearrange his or her finances, hoping that the person can recover and build up his business once again.

As soon as the company enters to the conditions of Chapter 11, they can still operate on a day-to-day basis.

Companies affected with this type of condition can still trade stocks. Therefore, this is indeed a gratuity for shareholders because they have a chance of maintaining their investments as soon as the company reorganizes itself. Unlike the conditions of Chapter 7 bankruptcy, the company can no longer exist because all their stocks will be liquidated.

However, it will be unnecessary to still buy the stocks of these companies because more often than not the company will only end up in financial loss.

Chapter 11 bankruptcy is almost certainly the most flexible of all the chapters, and the same time the hardest to generalize. Its flexibility makes it generally more expensive to the debtor. The rate of successful Chapter 11 reorganizations is miserably low, estimated at only 10% or less.



Written By: Dean Shainin

About the guy/gal that wrote this:

There are two broad forms of bankruptcy, no matter your definition - Liquidation and reorganization. Liquidation is provided for in the United States under Chapter 7 of the Bankruptcy Code while Reorganization is covered under chapters11, 12 and 13.

CHAPTER 7

Chapter 7 bankruptcy is the chapter of the Bankruptcy Code that provides for the sale of the debtor’s non-exempt assets for the distribution of the proceeds to creditors (liquidation). Usually, a trustee collects the debtor’s assets, which forms the bankruptcy estate, under court supervision and “converts” it to cash for onward distribution to creditors. This is subject to the rights of the debtor to keep certain assets, which are exempt (for example personal clothing). Also, distribution of the liquidated assets is subject to the rights of secured creditors. As may be expected, most Chapter 7 bankruptcy cases are “no assets” cases, as the debtor literally has no assets that can be liquidated.

An individual or business filing for a Chapter 7 bankruptcy case is required to begin by filing a petition with the relevant bankruptcy court serving his area or the area where the business is registered or operated with its main assets.

The petition stage can be described as the declaration stage. The debtor will also need to provide other documents to the court in addition to their petition. This may include but not limited to;

§ A schedule of assets and liabilities

§ A schedule of current income and expenditures

§ A schedule of executory contracts and unexpired leases

§ A statement of monthly net income and any anticipated increase in income or expenses after filing.

Basically, the additional documents would capture all your assets, debts and financial affairs. On the average, the process may take up to six months and may cost the debtor in terms of filing, and administrative fees. Unfortunately, you cannot file a Chapter 7 bankruptcy if you have a bankruptcy discharge in the last six to eight years and also if your current financial affairs can permit a Chapter 13 bankruptcy. Debts like priority taxes, support, student loans, liens and any debts that were reaffirmed are not discharged under Chapter 7 Bankruptcy.

CHAPTER 11

Knowing the different types of bankruptcy is very importance especially if you are into business. Always remember that businesses sometimes hit a bad spell so you have to be prepared for any eventualities. If you are a business owner, you need to know about Chapter 11 Bankruptcy also known as Re-organization Bankruptcy. Since with type of bankruptcy involves Partnerships and Corporations, it is imperative you should know about this type of bankruptcy.

Under Chapter 11 Bankruptcy, businesses are allowed to propose payment plan to their creditors. The payment plan shall include the length of time needed for the business to recover and settle its financial obligations. Although there are some provisions under Chapter 11 Bankruptcy that are similar to Chapter 13 Bankruptcy, the two are quite different in the sense that Chapter 13 bankruptcy is more concerned with individuals. The fees that apply to partnerships and corporations are also different to those fees imposed on individuals who file for bankruptcy.

What Fees Apply Under Chapter 11 Bankruptcy?

A mandatory filing fee of $1,000 and additional $39 miscellaneous administrative fees apply under Chapter 11 Bankruptcy. In cases of joint petitions, only one filing fee is imposed. Since these fees are considered as mandatory, the failure of the debtor to pay these fees may cause the dismissal of the petition. Once the case is already in progress, the business or the petitioner may be required to pay the court trustee every quarter. The amount of the fees differs depending on the amount involved. In most cases, the fees would range from $250 up to $10,000.



Written By: Legal Helpers

About the guy/gal that wrote this:

Peter Kent inquired:


As individuals continue to invest funds with stockbrokers and brokerage firms, the amount of unethical practices among pension funds is on the rise.

The fiduciary obligations of trustees also make it vital that actions be taken to recover losses due to securities fraud. Additionally individuals who have lost their retirement benefits, or whose plan value has significantly declined, may have causes for legal action.

The Employee Retirement Income Security Act of 1974 (ERISA) protects the assets of the American public to ensure funds placed in retirement plans will be available to them when they retire. ERISA is a federal law that sets minimum standards for pension plans in private industry. Most of the provisions of ERISA are effective for plan years beginning on or after January 1, 1975. ERISA requires that companies who establish plans must meet certain minimum standards. The law generally does not however specify how much money a participant must be paid as a benefit.

In general, ERISA does the following:

* Requires plans to provide participants with information about the plan including important information about plan features and funding. The plan administrators must furnish important facts about the plan regularly and automatically.

* Participation, vesting, benefit, funding and accrual minimum standards are set through this. When a participant becomes eligible and able to accumulate benefits or non-forfeitable right — is all defined by law. The law also establishes detailed funding rules that require plan sponsors to provide adequate funding for your plan.

* Requires accountability of plan fiduciaries. Defines a fiduciary as anyone who exercises discretionary authority or control over a plan’s management or assets, including anyone who provides investment advice to the plan. Fiduciaries that do not follow the principles of conduct may be held responsible for restoring losses to the plan.

* Gives participants the right to sue for benefits and breaches of fiduciary duty.

* Guarantees payment of certain benefits if a defined plan is terminated, through a federally chartered corporation, known as the Pension Benefit Guaranty Corporation (PBGC).

Under the requirements to provide information one of the most important documents a participant must receive automatically when becoming a member of an ERISA-covered pension plan or a beneficiary receiving benefits under such a plan, is a summary of the plan (SPD). The plan administrator is legally obligated to provide this document. The revised SPD is a separate document with a summery of modifications.

ERISA protects plans from mismanagement and the misuse of assets through its fiduciary provisions. ERISA defines a fiduciary as anyone who exercises discretionary control or authority over plan management or plan assets, anyone with discretionary authority or responsibility for the administration of a plan, or anyone who provides investment advice to a plan for compensation or has any authority or responsibility to do so. Plan fiduciaries include, for example, plan trustees, plan administrators, and members of a plan’s investment committee.

The primary responsibility of fiduciaries is to run the plan solely in the interest of participants and beneficiaries and for the exclusive purpose of providing benefits and paying plan expenses.

Fiduciaries must act prudently and must diversify the plan’s investments in order to minimize the risk of large losses. In addition, they must follow the terms of plan documents to the extent that the plan terms are consistent with ERISA. Conflict avoidance between related parties, including other fiduciaries must also be ensured.

Fiduciaries that do not follow these principles of conduct may be personally liable to restore any losses to the plan, or to restore any profits made through improper use of plan assets. Legal action may follow against fiduciaries that breach their duties under ERISA including their removal and potential criminal prosecution.

ERISA civil violations examples:

* Failing to operate the plan prudently and for the exclusive benefit of participants.

* Using plan assets to benefit certain related parties to the plan, including the plan administrator, the plan sponsor, and parties related to these individuals.

* Failing to properly value plan assets at their current fair market value, or to hold plan assets in trust.

* Failing to follow the terms of the plan (unless inconsistent with ERISA).

* Failing to properly select and monitor service providers. Taking any adverse action against a participant for exercising their rights under the plan.

The Department of Labor (DOL) enforces Title I of the Employee Retirement Income Security Act (ERISA), which, in part, establishes participants’ rights and fiduciaries’ duties. The DOL’s Employee Benefits Security Administration (EBSA) is the agency charged with enforcing the rules governing the conduct of plan managers, investment of plan assets, reporting and disclosure of plan information, enforcement of the fiduciary provisions of the law, and workers’ benefit rights.

If an employer declares bankruptcy, there are a number of choices as to what form the bankruptcy takes. A Chapter 11 (reorganization) bankruptcy may not have any effect on a pension plan and the plan may continue to exist. A Chapter 7 (final) bankruptcy, where the employer’s company ceases to exist, is a more complicated matter.