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How to Deal with Bankruptcy and Debt Recovery

If your debt has gone beyond the point at which you can manage it, filing for bankruptcy may be the most reasonable course of action. It is not an easy decision. You may want to continue to fight to make your way out of the financial abyss. But doing so may cause more harm than good. It may be better for you to declare bankruptcy, deal with the consequences, and make a clean start.

Bankruptcy no longer carries the stigma it once did. It no longer indicates failure, but a break with the past and the opportunity to begin anew. Volatility and uncertainty are permanent features of the modern economy. Some of the most prominent people in business have had to go through several bankruptcies before reaching their current status. You should feel no more shame than they did about the need to file bankruptcy—especially if you have been driven to it by circumstances beyond your control.

Your first action should be to hire a lawyer. You will need the advice and insight of a bankruptcy lawyer to help you sort through the paperwork and legal proceedings involved in this act. Your lawyer will also stand up for your rights and provide you with the guidance you need when dealing with public officials and creditors.

You may need to prioritize the latter. If you have been in financial difficulties for some time, then you will have received harassing phone calls and threatening letters and emails from your creditors. Once you file for bankruptcy, these communications must cease. If they continue, then you can refer the offending party to your lawyer, who will advise them of your status and demand that all correspondence for you go through them.

Your lawyer can also help you select a trustee. The trustee is the person or organization you work with to manage your bankruptcy. Their job is to ensure a fair and reasonable outcome for you and your creditors. During your bankruptcy you are obligated to provide your trustee with all information involving your income and finances. You will need to give them supply books, bank statements, and all other documents related to your personal finances. You do have the right to nominate a trustee, and your lawyer can help you make this choice.

When you declare bankruptcy, most but not all of your debts are dissolved. The bankruptcy will clear away all of your unsecure debt, including:

-credit and store cards

-unsecured personal loans and pay day loans

-gas, electricity, phone and internet bills

-overdrawn bank accounts and unpaid rent

-medical, legal & accounting fees

You will still have to service the following kind of debt:

-court imposed penalties and fines

-child support & maintenance

-government student loans

-debts you incur after your bankruptcy begins

It is not possible to wipe away secured debts through bankruptcy. A creditor has the right or repossession if you do not make payments on, for example, your house, car, or rented furniture and electronics.

You should also keep in mind that your bankruptcy may affect future income and employment opportunities. A bankruptcy is a legal and therefore a public act. Anyone carrying out a background check on you will come across the fact that you have declared bankruptcy. Some companies may have no issue with this. To others, it may be a disqualifier. Your bankruptcy may prevent you from assuming any position that gives you access to sensitive information. You may have trouble getting jobs in law, finance, and consulting. You may also be refused work in certain government sectors.

While there is no cap on the amount of money you can earn, you may have to make compulsory payments if your income exceeds a certain after-tax amount. You must also inform your trustee if you change jobs, stop working, or see an increase in your income.

Another consequence of bankruptcy is limits on travel. You must request permission from your trustee to travel overseas. Not doing so is an offence.

All of this may seem ominous and overwhelming, but it need not be so. With the help of a highly skilled and experienced bankruptcy lawyer such as the ones found at you can navigate the troublesome waters of bankruptcy.

Here are some of the specific issues a lawyer can help you with:

  1. Find alternatives to liquidation and bankruptcy

Before you file for bankruptcy you should determine whether you even need to. Bankruptcy is a last option; it should only be done if you have marshalled all the facts and can see no alternative to it. Hiring a bankruptcy lawyer can help you gather, review, and analyze all the data regarding your finances and income. They may determine that there are other legal ways, short of bankruptcy, to gradually get you out of debt.

  1. Deal with secured assets and creditors

Going bankrupt does not mean you have to lose your home and car. Your lawyers can work with the institutions that finance these to come to some reasonable agreement or settlement. If you own your house outright and one of your creditors wants to take it as a means of settling your debt to them, your lawyer can put a stop to this. A bankruptcy lawyer can also help you protect expensive heirlooms and gifts that have more of a sentimental than monetary value to you.

  1. Reduce personal exposure

If you run a business that has gone into bankruptcy, your first priority must be to reduce your personal exposure. In most instances, debt that is owed by a company cannot be transferred to the employees or owners of that company. Your lawyer will help protect you from those who try to hold you liable for the failure of your business.

  1. Manage administration by liquidator or trustee.

Your lawyer can also act as a liaison between you and your trustee. They will monitor all actions and activities of the trustee, and will ensure that you are being fairly treated and that your rights are fully protected.

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