Bankruptcy, in its nascent stage, was formulated for the benefit of creditors. This gave power to the creditor to seize all the assets of the debtor to compensate for his loss. This scheme not only left the debtor broke but also caused him to serving imprisonment. However, the system has been transformed a good deal over time. In present days, bankruptcy is generally filed by a debtor who acknowledges his inability to pay back his loans. This enables the debtor to easily remodel his finances and attempt at partially repaying what he owes while continuing his business. The legislation that governs bankruptcy varies from country to country as well as from state to state. For example, in the US adheres to a Bankruptcy Code based on which there are six different types of bankruptcy called Chapters while Netherlands follows the Dutch Bankruptcy Code. Again, Tampa Chapter 7, more commonly termed as straight bankruptcy, and Tampa Chapter 13, also known as Wage Earner Bankruptcy, may have laws that are different from the ones followed in other states of the US.

When an individual files for Straight Bankruptcy, he or she is required to give up all properties that are free from taxes and other liabilities. The trustee handling the bankruptcy takes the returns of these assets and divides it among the creditors. In this way the debtor is relieved of a portion of or the whole loan sum, as may be eligible aganst the proceeds acquired from the surrendered assets. The US bankruptcy laws permits a citizen to file for this type of insolvency only once in every eight years. After the amendment made in the year 2005, the applicant must also undergo a test to find out whether he or she is eligible to file for this bankruptcy. Inability to pass this test leads to the rejection of the bankruptcy application and at times recommends Wage Earner Bankruptcy to the applicant. It is necessary to be advised by a competent bankruptcy attorney to find the best way to deal with this situation.

As is evident from the name, Wage Earner Bankruptcy is aimed at those who have a steady flow of earnings. Under this type, the applicant is required to go for a repayment plan wherein the applicant chooses to repay his debt with a portion of his income. Depending on factors like income, expenditure, assets, etc., the repayment tenure can be anything between three years and five years. The tenure cannot cross the five years’ limit. In this case too the trustee plays an important role. Debtors pay the trustee who then pays the creditors involved. Again, in case of the debtor’s failure to make the payment, legal proceedings will act upon the trustee’s motion.

As is evident, it is essential to hire a bankruptcy lawyer or attorney who has the necessary expertise and efficiency to handle your case. It is also important that you maintain great transparency with your lawyer. Failing to adhere could mean that you are committing strategic bankruptcy or even bankruptcy fraud, both of which can have nervous effects on your bankruptcy case.

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