The bankruptcy process seems cumbersome, and many people lack the know-how, so consulting aMesa bankruptcy lawyer is a wise option. Bankruptcy is a method of eliminating debt. The existence of the debt is very stressful to debt holders. Creditors harass debtors while they collect payments, especially where there is a delay. Some of the forms of harassment are calling family and bosses to claim expenses. It ruins the reputation of debt holders to the employers and might lose their jobs. Other examples of harassment are threats and regular calls for 24/7. It is tiresome and instills fear.
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Steps of the bankruptcy process
There are six steps in the process. The first step is pre-bankruptcy counseling. The client meets with the counselor who specializes in credit. The bankruptcy lawyer should recommend the best counselor. Topics of discussion at the meeting are the client’s financial position, preparing a personal budget, and bankruptcy options. The second step is filing a bankruptcy petition, a document with a list of all the debts. If the client is a sole proprietor, the list contains personal and business incomes and debts. A sole proprietor cannot separate personal and business debts. The client’s financial reports offer the lawyer insights in preparation of the document. The bankruptcy lawyer drafts the document. Afterward, the client files the petition officially in the courts.
The third step is the issuance of the automatic stay. When the client files the petition, a court issues an order to restrain creditors from claiming their debts. To ensure the creditor follows the legal procedures, they receive two court notices. These notices are Notice of Filing and Notice of Stay. During this time, the creditors cannot sue the client. The fourth step is the bankruptcy trustee arranges a creditor’s meeting. The client and the lawyer are required to attend. The trustee should arrange the creditor’s appointment after one or two months.
In some cases, the creditors can attend the meeting to convey their grievances. The fifth step is the debtor education program. It is short, and sometimes it is online. The client learns how to use credit money and wise budgeting. The last step is the discharge of the debt.
In the bankruptcy process, the client should not sell or transfer the property to anyone, even to family members. Also, before filing for bankruptcy, the client might be tempted to sell the assets. It is a mistake. It is fraudulent if one leaves out any creditor from the petition.
Within ninety days before filing a petition, the client should not pay any debt.
Payments involved in a bankruptcy process
A client can pay the filing fees in installments. The court can incorporate the payments in the repayment plan. Also, fee waivers are available.
Tips to prevent being bankrupt
A person should set a specific amount to save or specify the exact monthly payments and completion date if one has a loan. Goals should be clear to avoid vagueness. A client has to keep an excel sheet, which entails the savings. Also, a person can opt for a graphical representation. It shows the level of debt and savings so one can see the comparison. The next tip is to convert all the goals into smaller goals. Instead of setting an annual saving limit, one should select a daily saving limit.
Holiday and financial ruin
Holidays are a time of vacations and gifts. The level of spending is very high. If one is not careful with the spending during the holiday, there will be no money left for the following year. The first thing to do to prevent excess spending is to prepare a budget with the necessary expenditure list. There is a difference between needs and wants. Everything on the expenditure list should be a need. Wants are not essential. If one can afford the needs and wants, he or she can spend on both. On the other hand, if one is struggling financially, they should spend on necessities only. The worst consequence of excess holiday sending is borrowing debt to go to a holiday.
Another way to prevent financial ruin during holidays is sticking to cash payments only. One should pay with the money at hand. Taking goods on credit can lead to the economic downfall.
Also, one can opt to save for the holiday at the start of the year. This act can reduce the financial strain.
Insolvency, liquidation, and bankruptcy
If a person or business has financial troubles, the first option is insolvency, and the second is bankruptcy. Suppose the company is insolvent, the business works hard to pay the debts even though it is a challenge. When the business is genuinely unable to pay, the courts intervene. It is where bankruptcy comes in. The court comes up with a payment plan that is favorable to the business.
In simple terms, a business or person is insolvent if it cannot pay debts from the assets. If the company shows progress in repayment of the obligations and loans, the chances of becoming insolvent are very minimal.
The main categories of insolvency are balance sheet insolvency and cash flow insolvency. Balance sheet insolvency is where the value of the assets is less than the debts. If this is the case, the business will not cover the debts, thus leading to insolvency. On the other hand, cash flow insolvency occurs when the firm does not have the cash to pay the debts.
Liquidation is when the business sells the assets and pays the stakeholders such as creditors and shareholders. The three types of liquidation that exist are court-mandated liquidation, members voluntary, and creditors voluntary liquidation. A court-mandated liquidation starts when a creditor goes to court to demand the business to wind up because of its debt. First, the creditor sends a statutory letter to require payment within the next 21 days. If the company does not comply, the liquidation process starts. A liquidator is then appointed and sent to the company. The liquidator takes charge of the business. The directors should step aside to allow the liquidation to go on smoothly without interruption.
Creditor’s voluntary liquidation commences due to a shareholder’s resolution, not a court order. It is done voluntarily by the shareholders. This type of liquidation is suitable for businesses that are unable to pay debts and have stopped trading.
Member’s voluntary liquidation is where the shareholders sell the assets after cessation of business. The appointment of the liquidator follows. The liquidator uses the sale proceeds of the assets to pay the creditors. After the creditors get their dues, the remainder goes to the shareholders.
Different people have varied plans when it comes to maintaining financial success. Do you feel like you are going bankrupt? Do you need a Mesa bankruptcy lawyer to assist you? Ideally, you can gain many benefits from sound finance advice. However, if you do not know what the end game should be, it means you may be lacking a clear financial goal. And that is what people typically miss when they go to ordinary law firms. Well, you are not far from getting everlasting assistance. Here at Mesa bankruptcy law firm, they have experts who will help you reach financial help while getting the necessary advice on living a healthy economic life. Even if you have tried other law firms and failed before, their experts will do better than you ever thought. Please do not shy away from speaking about your case, they are here to help, and they do so correctly. Call us today and let them begin your journey towards everlasting wellness