There are many reasons why people land up in financial difficulties. People lose their jobs or are forced to spend all their savings on expensive medical treatment. Others are simply financially irresponsible and live beyond their means. Businesses may suffer due to rapidly changing markets. The list is endless but the fact remains that there are more and more people who simply cannot service their debt any longer. However, before applying for Chapter 11 bankruptcy Salinas citizens should think very carefully.
It is a common misconception that insolvency is a quick way in which to deal with overwhelming debt. This is most definitely not the case. Applications for insolvency are not accepted by the courts before they have made very sure that the applicant truly does not have the means to honor his obligations. To this end a means test is applied. Stringent criteria are applied during this process.
Insolvency is not a solution to financial troubles. It is a serious step that may have detrimental consequences for applicants lasting many years. It should always be the absolutely final resort when every other option has been exhausted. Those in trouble should try other remedies first, such as being honest with their creditors and by asking them to agree to lower monthly premiums over a longer payment period.
Applicants for insolvency will not only have to undergo a means test, but their entire financial lives will also be put under the microscope. They will have to explain their lifestyles, their extravaganzas and their expenditure. They will have to make an inventory of all their assets and submit it to the court. Their income will be scrutinized. The entire process is painful and often very humiliating.
When the court finally accepts an application it rapidly appoints a trustee to manage the process. The trustee is not there to assist the applicant. Instead, he is there to see to it that the demands of the creditors are honoured. He will therefore seize the assets of the applicant and sell them. The money earned will be distributed to the creditors. The applicant will be left with only the bare essentials necessary to survive.
The court will only issue a final discharge order once the trustee informs it that everything possible has been done to satisfy the creditors of the applicant. Once this order is issues creditors may no longer make any demands upon the applicant. This does not mean that all his financial responsibilities are cancelled, however. Support payments, outstanding taxes and secured loans must still be paid.
Far too many forced into insolvency waited way too long before they acted on their troubles. Professional help should be obtained at the very first instance when it becomes clear that the financial burden is becoming unmanageable. Ignoring a problem never makes it disappear. If help is obtained at an early stage a rescue plan can almost always be formulated and implemented.
Bankruptcy is not an easy way out of financial trouble. Bankrupt individuals will struggle to enter into any financial agreement and they will not qualify for any form of financing. It may take many years to recover from the loss of all the assets and loved ones will suffer in the process.
It is a common misconception that insolvency is a quick way in which to deal with overwhelming debt. This is most definitely not the case. Applications for insolvency are not accepted by the courts before they have made very sure that the applicant truly does not have the means to honor his obligations. To this end a means test is applied. Stringent criteria are applied during this process.
Insolvency is not a solution to financial troubles. It is a serious step that may have detrimental consequences for applicants lasting many years. It should always be the absolutely final resort when every other option has been exhausted. Those in trouble should try other remedies first, such as being honest with their creditors and by asking them to agree to lower monthly premiums over a longer payment period.
Applicants for insolvency will not only have to undergo a means test, but their entire financial lives will also be put under the microscope. They will have to explain their lifestyles, their extravaganzas and their expenditure. They will have to make an inventory of all their assets and submit it to the court. Their income will be scrutinized. The entire process is painful and often very humiliating.
When the court finally accepts an application it rapidly appoints a trustee to manage the process. The trustee is not there to assist the applicant. Instead, he is there to see to it that the demands of the creditors are honoured. He will therefore seize the assets of the applicant and sell them. The money earned will be distributed to the creditors. The applicant will be left with only the bare essentials necessary to survive.
The court will only issue a final discharge order once the trustee informs it that everything possible has been done to satisfy the creditors of the applicant. Once this order is issues creditors may no longer make any demands upon the applicant. This does not mean that all his financial responsibilities are cancelled, however. Support payments, outstanding taxes and secured loans must still be paid.
Far too many forced into insolvency waited way too long before they acted on their troubles. Professional help should be obtained at the very first instance when it becomes clear that the financial burden is becoming unmanageable. Ignoring a problem never makes it disappear. If help is obtained at an early stage a rescue plan can almost always be formulated and implemented.
Bankruptcy is not an easy way out of financial trouble. Bankrupt individuals will struggle to enter into any financial agreement and they will not qualify for any form of financing. It may take many years to recover from the loss of all the assets and loved ones will suffer in the process.
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