Insolvency, in its nascent stage, was devised for the benefit of lenders. This gave power to the creditor to confiscate all the property of the debtor to compensate for his loss. This method 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 normally filed by a lender who acknowledges his inability to pay back his loans. This helps the debtor to conveniently re-organize his finances and attempt at partially paying off what he owes while continuing his business. The legislation that governs bankruptcy differs from country to country and even from state to state. For example, in the US adheres to a Bankruptcy Code according to which there are six different types of bankruptcy known as Chapters while Netherlands abides by the Dutch Bankruptcy Code. Again, Tampa Chapter 7, popularly termed as straight bankruptcy, and Tampa Chapter 13, also known as Wage Earner Bankruptcy, may have legal implications that are different from those followed in other states of the US.

When a person files for Straight Bankruptcy, he or she needs to give up all assets that are free from taxes and other liabilities. The trustee handling the bankruptcy takes the proceeds from these assets and splits it among the creditors. In this way the debtor is relieved of a part of or the whole loan amount, as may be eligible aganst the proceeds acquired from the surrendered assets. The US bankruptcy laws allow a citizen to file for this type of bankruptcy 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 qualified to file for this bankruptcy. Inability to pass this test leads to the rejection of the bankruptcy application and sometimes suggests Wage Earner Bankruptcy to the applicant. It is necessary to be advised by a competent bankruptcy attorney for finding the best way to deal with this insolvency.

As the name suggests, Wage Earner Bankruptcy is meant for those who have a steady flow of earnings. Under this type, the debtor is required to opt for a repayment plan wherein the applicant chooses to repay his debt with a portion of his income. Depending on factors like income, expense, assets, etc., the repayment tenure can be anything from three to five years. The tenure cannot go beyond the five years’ cap. In this case too the trustee plays a pivotal 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 advocate. Failing to comply could mean that you are committing strategic bankruptcy or even fraudulent bankruptcy, both of which can have nervous effects on your bankruptcy case.

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