A record number of people were declared insolvent last year as the recession pushed many homeowners and businesses into the red, new figures revealed today. Across England and Wales, 134,142 people went bankrupt, took out an Individual Voluntary Arrangement or Debt Relief Order in 2009, the Insolvency Service said. This dwarfs the previous record of 107,288 personal insolvencies from 2006. Experts believe this had already been passed by October last year.

Total company liquidations reached 19,077 during 2009, the highest figure since 1993. But the number for companies in the final quarter of the year was lower than both the previous three months and the same quarter of 2008. In contrast, the level of individuals declared insolvent continued to speed up in the last quarter at 35,574 – the highest since records began in 1960.This is a 25 per cent rise on the figure for 2008 and the eight consecutive quarter where the tally has increased.

A breakdown of the total number of insolvencies for the final three months of 2009 showed 17,007 people went bankrupt, 7 per cent fewer than in the previous quarter. But a record 13,219 people took out Individual Voluntary Arrangements, under which interest on debt is frozen in exchange for a set amount being repaid each month. It is thought IVA numbers were boosted by companies cutting staff pay and overtime as an alternative to making redundancies, meaning people were in a position to repay some of what they owed, rather then being forced to declare themselves bankrupt.

There was also a further increase in the number of Debt Relief Orders taken out in the three months to the end of December, with these rising to 5,348, up from 4,505 in the previous quarter. Both chapter 7 bankruptcy and chapter 13 bankruptcy therefore continue to rise.

As consumers across the land continue to struggle, we continue to look for signs that an economic recover is at hand, budding, and springing forth.

 

*Note: This article is not legal advice, it is a personal opinion based on experience from the author. If you are seeking legal advice please check with your local bankruptcy attorney.

Reorganization or liquidation process is what bankruptcy is referred to. Federal court handles bankruptcies for people and businesses with debt. Some people qualify for total debt elimination. Instead some repay some of what they owe. Some are glad to liquidate their property. The courts may order you to let them sell none exempt assets to pay a portion of the debt. Liquidation falls under chapter 7 filing. If you would rather keep valuables consider a reorganization of your debt. This allows people to keep all their property on the condition that payments will be made for 3 to 5 years. Most or all your debt gets paid with this option. Many Americans opt for a chapter 13 reorganization.

Chapter 7 bankruptcy

If you file for bankruptcy you are known as the debtor. You can rid yourself of the debt you owe with a chapter 7 bankruptcy. If a case is granted then the debtor is no longer required to pay any debts that get discharged. Sometimes people get stuck with property that is held out of discharge by a valid lien. With a debt held by a lien you must pay up or return the property. After a discharge creditors may not try to collect or communicate with a debtor about a debt. Consumers who have way too much debt that cannot be repaid are good candidates for chapter 7 bankruptcy.

Chapter 13 bankruptcy

For chapter 13 bankruptcy a debtor will file a payment plan with the federal courts to pay back some or all the debts that they owe, over a three to five year period. You can keep your car or home with a chapter 13 bankruptcy. Included is valuable items with a balance and equity your federal exemption won’t cover. You will be forced to make monthly payments towards your secured debts and even pay extra to get caught up on past due obligations. A chapter 13 bankruptcy allows you to keep your house and car. Debtors can make payments over time on secured debts.

Does the federal court allow more than one bankruptcy?

Some people will file chapter 7 bankruptcy every 6 years. File a chapter 13 once or a hundred times it’s up to you. Surprisingly chapter 7 only costs $ 200. There will be a $ 30 noticing fee as well as a $ 155 filing fee. When a joint petition for a husband and wife is filed the fees will not double.

Is court unavoidable?

One meeting you have to attend is called a meeting of creditors. You will meet the bankruptcy trustee and some creditors. After you file expect to have a proceeding in 40 days or so. At this meeting you will be asked a few questions about your financial situation. Creditors and trustees who want to file a motion can at this time. If you need to dispute any debts this would be where you would petition for it. Federal bankruptcy courts will send you a notice to appear if additional hearings are required.

Will I regret filing bankruptcy?

If severely in debt a bankruptcy will not affect your life much. Unpaid debt is far worse than a bankruptcy. Recovery from a bankruptcy will take 10 years. Rebuilding your credit is easy after bankruptcy cleans your credit report. Lots of people just need a fresh start. A life time of bad debt stinks. After you file bankruptcy you will want to make wise money decisions. It’s a sad reality that many have no clue how to handle money properly. Bankruptcy does not discriminate many people start off on the wrong foot others have a sudden loss of income. You never have to be in debt again just learn from your past.

Nowadays it seems everyone from big business to celebrities is filing for bankruptcy, either chapter 7 bankruptcy or chapter 13 bankruptcy. While major corporations are getting government bailouts with our tax dollars, wouldn’t it seem fair if we could get a bailout too?

Sure, you can file for bankruptcy and have many of your debts cleared off your books through a bankruptcy discharge. But, how do you know if you need to file for bankruptcy? At what point do you throw up the white flag to your creditors and declare bankruptcy? Here are 10 signs that are strong indicators that you may need to file for bankruptcy:

1. You’ve depleted your savings and are considering cashing out your retirement savings to pay your bills; 
2. You’re living on credit cards and your debt increases rather than decreases each month; 
3. Your family has given you loans or bought you food; 
4. You’re behind on your rent or mortgage, or are in foreclosure; 
5. You’re anxious when the phone rings because the only calls you get are from debt collectors; 
6. You can only afford to pay the minimum payments on your debts and have high interest rates; 
7. You’re using the legal loan sharks at those payday advance shops to get cash; 
8. You know you have a lot of debt, but don’t exactly know how much and you’re afraid to look; 
9. Your car is about to be repossessed; 
10. You’re being sued and you know you cannot afford to pay for any judgment.

If you, or someone you know is experiencing extreme financial hardship during these challenging economic times, it’s important to take action sooner rather than later. The sooner you discuss your situation with a trusted authority, like your local bankruptcy lawyer, the more likely you will be able to have your debts discharged without having to go broke doing it. This means that you can save your retirement for retirement and still get out of debt.

As the economy is in a period of recession, insolvency has become more common. In reality, over 1 million Americans nationality holder filed insolvency in 2007. It is a financial state that often precedes bankruptcy.

Chapter 13 and chapter 7 bankruptcy is a lawfully declared situation in which a person or business becomes insolvent; it means that they are not in a position to pay their creditors. There are several causes of insolvency; among them is an uninsured chronic disease, which requires to be hospitalized for a certain period of time.

Debt is a part of life these days, but excess of debt can make life complicated to enjoy. There are two potential solutions to get independence from this trouble and get rid of your financial worries. It includes submitting file for insolvency and negotiating with Debt Settlement Company. Before you choose any option, it is important to know the pros and cons of using a debt settlement company versus filing for insolvency to alleviate your financial misery.

Negotiation with Debt Settlement Company is the first solution after personal insolvency, and there are some factors that will examine whether negotiation with debt settlement companies is right or wrong. You need to see your monthly income; if it is more than your essential living expenditures, debt settlement may help you to resolve your financial crisis. You must ask each debt settlement company about their unsecured debt balance necessities to decide which debt arrangement company is right for your circumstances.

Look for honest debt settlement companies because you cannot bear any more shocks at this stage. You need to look at the fee which must be reasonable according to the amount of services rendered. You have to find a company who has a strong record of efficiently negotiating with the creditors. You have to make your mind and get yourself ready to accept the disadvantages of debt settlement programs such as the increased creditor calls, lawsuit initiated by creditors, tax troubles etc.

You may discuss your financial problems with a legal representative who have specialized in bankruptcies. A legal representative can prove to be a strong hand, in order to get independence from your all financial worries.

An IVA (Individual Voluntary Arrangement) is a kind of debt management plan set up to deal with personal debt and with the issue of personal insolvency. The needs of one individual may be vastly different from the needs of another. Any IVA help given must take into account the vast nature of the situation, in which people find them.

Another simple solution for personal insolvency is filling for bankruptcy. You can determine whether filing for bankruptcy is a better solution as compared to other solutions. When other kinds of debt settlement plans fail, one is left with bankruptcy filing as the only option. It is a legal process that gives you the option of declaring your current financial position through a court case. In filing the petition, there are a number of chapters under which you can file your case, depending on your ability to repay the debts.

Private debt management companies are the areas of economy that are doing well even in the recession. Debt solutions, such as personal bankruptcy, Individual Voluntary Arrangements and debt management plans are proving to be extremely acceptable by the debtors. Debt solutions help people to either manage or write-off debt, as well as help to prevent creditor harassment.

Chapter 7 bankruptcy is one of a number of categories of bankruptcy that makes up the Bankruptcy Code that was enacted in 1978, and amended in 2005 under the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA). In particular it deals with the situation faced by individuals and businesses who are unable to meet their debts and require protection from their creditors.

Chapter 7 Bankruptcy For Individuals

Individuals can file for bankruptcy under Chapter 7 can have certain debts discharged if they meet the necessary criteria. These necessary criteria were established under BACCPA (2005) and now include both a means test and the requirement to receive credit counseling.

Before being granted a Chapter 7 bankruptcy an individual will need to show that their disposable income falls below a certain threshold which will vary slightly from state to state based on the average income of that state.

The individual will also need to have received credit counseling from an accredited organization at some stage in the 180 days prior to their petition to be declared bankrupt.

Under Chapter 7 certain assets can be kept by the individual while others will need to be sold off to pay back some of the debt.

There are also certain debts which cannot be discharged under Chapter 7. These would include such things as child support, property taxes, income taxes incurred in the past three years, student loans and fines. 

Chapter 7 Bankruptcy For Businesses

A business may file for bankruptcy under Chapter 7 if they are heavily in debt and cannot service this debt with the current income of the business.

A Chapter 7 trustee is appointed and they will generally order the cessation of operations. At this point they have a couple of options. The most common of these is to simply take stock of the assets of the business and sell these off in an attempt to pay the creditors the money owed to them.

The second option applies mainly to larger businesses. If possible, individual divisions of the business may be sold to other companies to help meet the debts.

Under a Chapter 7 bankruptcy for a business the debt is not discharged. Instead the business is dissolved.

It is recommended that anyone filing for Chapter 7 Bankruptcy seek legal assistance. One of the provisions of this category of bankruptcy is that your petition will automatically be denied if you have had a petition rejected in the past 180 days. What this basically means is that if you apply and are rejected because you prepared your case inadequately you will not be able to reapply for six months.

And when you are in financial trouble, waiting this long may be too late – so it’s important for you to get it right the first time.