Future.

Bankruptcy is a legal process that can help those who are struggling financially find a fresh financial start. Those who have considered this process have likely stumbled on a number of legal terms, including “automatic stay.” This term refers to a court order that is granted after an applicant is approved for bankruptcy.

What happens when an automatic stay is issued? This court order requires creditors to stop contacting you. In addition to ceasing contact, these creditors cannot file a lawsuit in an attempt to gain payment or enter a lien against your property.

The automatic stay can also stop a landlord from evicting a tenant that is going through bankruptcy if the eviction is in connection to a demand for rental payment. The court order can also stop garnishment. Garnishment is a process that allows a creditor to remove money directly from your paycheck. When you get the paycheck from your employer, the creditor would already have taken a portion of payment from the check. When an automatic stay goes into effect, the garnishment should stop.

This order also extends to include utilities. A person that is going through bankruptcy is often protected from utility disconnection.

Does the applicant need to do anything to make the automatic stay go into effect? Essentially, no. The applicant just needs to put together a successful application for relief through bankruptcy. If granted, the automatic stay goes into effect automatically (hence the name).

This is just one of the many legal terms to understand before determining if bankruptcy is the right option for you. An experienced attorney can discuss this and other terms and help you decide the best way to get back on your feet.

Bankruptcy is touted as a fresh financial start, but those who have done some research likely know it will have a negative impact on one’s credit score. Although this is true, there are many reasons bankruptcy may still be the best option. Three common examples to take into consideration before ruling out bankruptcy include:

• Unmanageable debt. Failing to pay off debt will continue to chip away at one’s credit score. Depending on the type of debt, a successful bankruptcy petition can resolve this problem. Bankruptcy can lead to the discharge of debt, meaning the applicant is no longer liable for the debt. This can essentially wipe the debt off your record.
• Alternative methods are not an option. In some cases, consumer credit counseling services can offer an alternative to bankruptcy. Others may consider paying off debts with installments. If alternatives like those noted above are not an option, bankruptcy may be the best bet.
• Credit score is fluid. The credit score for each individual is always changing. It is not a static number. After the bankruptcy is complete, active steps are available that can help rebuild one’s credit score. Paying bills on time and using a credit card properly are two ways to take control of your financial future and start building that score.

Attempting to regain control of your finances is a frustrating process. A skilled lawyer with experience in alternatives to bankruptcy and the various forms of bankruptcy that are available can help guide you through this process and alleviate some of that frustration.

Toys “R” Us declared bankruptcy in September with a plan. The store was not going to give up. Instead, the story put together this plan to structure itself to reenter the marketplace successfully. Toys “R” Us is not giving up – it just went back to the drawing board to adjust its business model.

It may seem ironic that a business that thrives on keeping consumers in touch with their youth would provide valuable lessons in adulthood. Yet the store’s perseverance is applicable for anyone that is struggling financially. Lessons for those who are also struggling include:

• Mistakes happen. Financial mistakes happen. In the event these mistakes lead to difficulties making ends meet take comfort in the fact that you are not alone. The decision to consider bankruptcy is not a reflection on one’s personal situation, it is more akin to a business decision.
• There is more than one type of bankruptcy. There are different types of bankruptcy. Toys “R” Us is using Chapter 13, a version also available for individuals. This type of bankruptcy basically allows you to set up a more realistic plan to repay debts.
• Bankruptcy can offer a fresh start. Arguable, problems began when this toy selling giant in the retail world failed to transition into a market that now thrives online. The time it is taking to restructure its business plan allows for innovation and brain storming. The team behind the store can emerge from the bankruptcy stronger than ever. This is true for personal bankruptcy as well. Taking the time to develop a repayment plan and proactively get finances under control can set up for a fresh financial future.

Each form of bankruptcy has application requirements. In order to qualify, certain criteria must be met. An attorney experienced in these matters can review your situation and provide guidance on the best form of bankruptcy relief for you.

If you are considering filing for personal bankruptcy you have likely looked into a Chapter 7 bankruptcy. A Chapter 7 petition for relief through bankruptcy takes many steps, including discharge.

What is discharge? Discharge is defined by the United States Courts as the process that “releases individual debtors from personal liability for most debts and prevents the creditors owed those debts from taking any collection actions against the debtor.”

Essentially, this means the debt is forgiven.

Can any type of debt get discharged? Note the above definition states “most debts.” There are certain types of debt that do not qualify for discharge through bankruptcy. It is important to carefully consider the role dischargeability will play in your bankruptcy petition before moving forward.

Examples of debt that generally do not qualify for relief include child support, alimony, tax debts and student loans. The failure to allow for discharge of student loan debt is a contentious issue. In some cases, an individual can overcome this general rule. Discharge of student loans may be available if the applicant can establish the loan results in an “undue hardship.”

In order to establish undue hardship, the applicant must meet a three part test. The test includes a review of the applicant’s income, duration of the repayment period and whether or not the individual has made a good-faith effort to repay the loans.

There are also some cases where a creditor may file a complaint objecting to the discharge. These cases are not often successful. Examples of success are present when the creditor can establish that the person seeking relief through bankruptcy has kept fraudulent records or committed perjury during the bankruptcy process.

The term bankruptcy is likely a familiar one, but did you know that there are many different types of bankruptcy? One of the more common types used for individuals is Chapter 7. The following provides more information on this type of bankruptcy:

• Defined. Chapter 7 bankruptcy involves the discharge of qualifying debt. Examples can include credit card debt and medical debt. Once discharged, the individual that is granted relief through a successful petition for bankruptcy is no longer liable for the discharged debt.

• Process. The process begins with an application or petition for relief. If granted, an automatic stay will go into effect. This is a court order that means creditors can no longer demand payment. A trustee will be assigned to the case to review the assets and liabilities and administer the case.
• Aftermath. It is important to take proactive steps after a bankruptcy is complete to begin rebuilding your credit. It is important to pay all bills on time. It can also help to get a credit card. Establishing that you can manage a credit card and make payments on the due date will help to build your credit score.

Putting together a petition for relief requires completion of an application as well as submission of various schedules and paperwork. A failure to properly complete this petition can result in a denial of relief. As such, it is wise to seek legal counsel. An attorney experienced in handling Chapter 7 bankruptcy cases can provide assistance throughout the application process and help better ensure you receive the relief you need.