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.
Anyone who thinks that being declared bankrupt is a quick and easy way of getting out of financial trouble is in for a very rude shock. Insolvency is a very serious matter and the courts do not easily entertain applications. They will first apply a means test to make sure that the applicant is indeed in serious financial trouble. The majority of applicants actually fail this strict means test.
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.
If the court agrees to hear an application, it will immediately appoint a trustee. The job of this trustee is to do everything possible to raise the money demanded by the creditors of the applicant. To this end he may confiscate all the assets of the applicant and sell them on an open auction. All the money thus raised will be distributed among the creditors.
Only once the trustee is satisfied that everything possible has been done to Satisfy the creditors will the court finally issue a discharge order. When this is done creditors may no longer make any claims. This does not mean the applicant goes debt free, however. He will still be liable to pay back taxes, support payments and secured loans. He will also have to enter a financial rehabilitation program.
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.
The responsible management of their personal finances is a grave responsibility of every individual. When trouble looms, steps should be taken immediately. Insolvency is not a quick and easy answer. In fact, it often creates more problems than it solves.
Anyone who thinks that being declared bankrupt is a quick and easy way of getting out of financial trouble is in for a very rude shock. Insolvency is a very serious matter and the courts do not easily entertain applications. They will first apply a means test to make sure that the applicant is indeed in serious financial trouble. The majority of applicants actually fail this strict means test.
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.
If the court agrees to hear an application, it will immediately appoint a trustee. The job of this trustee is to do everything possible to raise the money demanded by the creditors of the applicant. To this end he may confiscate all the assets of the applicant and sell them on an open auction. All the money thus raised will be distributed among the creditors.
Only once the trustee is satisfied that everything possible has been done to Satisfy the creditors will the court finally issue a discharge order. When this is done creditors may no longer make any claims. This does not mean the applicant goes debt free, however. He will still be liable to pay back taxes, support payments and secured loans. He will also have to enter a financial rehabilitation program.
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.
The responsible management of their personal finances is a grave responsibility of every individual. When trouble looms, steps should be taken immediately. Insolvency is not a quick and easy answer. In fact, it often creates more problems than it solves.
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