Financial Articles

Most diseases including cancer and heart problems are easier to cure if detected early. Similarly, most sick companies can be turned around if the problems are discovered early. Sick companies need to be placed urgently into the intensive care units as the normal treatment regime is ineffective.

Unfortunately, owing to denial, ego or pure ignorance, many sick companies do not seek help till it is very late. Troubled businesses usually try to conceal their problems from others for obvious reasons – the creditors may stop their loans, suppliers may stop supplies, employees may jump ship etc. However, like sick people, sick company need to seek urgent help. They need to engage specialists to facilitate the restructuring programmes and to face the new harsh realities before it is too late.

Much like human health, more businesses are also destroyed by neglect than any other causes. This is why regular health check is vital to prevent any unexpected health problems, detect them early so that appropriate remedies can be administered. The traditional accounting methods such as balance sheets and profit and loss statements only capture the measurable financial aspects of the company at a certain point in time. Furthermore, the real financial health of the company can be masked by deliberate accounting irregularities as in cases at Enron and Worldcom. By the time the sickness is visibly evident in the company’s accounts, it may already be too late to take corrective action to reverse the situation. Oftentimes, when the accounts show red, the company is extremely sick or suffering from haemorrhage. There are many other non-quantifiable financial factors that may impinge upon the health of the company. These may include high staff attrition, low morale or an incompetent CEO.Usually, there are ample warning signs or symptoms of impending trouble. However, these warning signals are often ignored or suppressed; hence the onset of a crisis comes as a surprise.

Early detection of business problems is vital to sustaining a company’s growth, manage the crisis effectively and to contain the economic distress. Business problems rarely occur suddenly. Most problems develop over a long period of time due to a series of financial, legal, operational and strategic errors or miscalculations that went largely ignored or undetected by management. Some obvious examples that a company is heading down the wrong course include persistent operating losses, high key staff attrition, loss of morale and market share.

It is important to pre-empt any problems from arising by looking out for warning signals. Therefore, a proverb that says: “The superior doctor prevents sickness. The mediocre doctor attends to impending sickness. The inferior doctor treats the actual sickness.”

When the 2005 Bankruptcy Act was created, this affected the bankruptcy laws in California, as well as other states across the country. Within this act, those involved in California bankruptcy are required to participate in credit counseling. This participation must occur within 180 days of the bankruptcy filing. Furthermore, any person filing for bankruptcy is also required to complete a course in financial management.

This means that any California bankruptcy filer must have an evaluation of the expenses and their income. By doing so, you can determine if a chapter 13 or a chapter 7 California bankruptcy is right for you. The new bankruptcy laws established in 2005, requires a great many new things, all of which affects the California bankruptcy laws as well.

As a requirement, you must undergo an evaluation. What will happen is that a court official will create a document that details the past six months of income you have received. They will then compare your income with that of the California median income. In order to file a chapter 7 bankruptcy, your income must fall below the median income within California.

However, just because your income does not fall below that level, does not mean you cannot file a chapter 7 bankruptcy, it does mean that other factors will need to be considered in making the determination. However, in most instances, when the income is above the median income level in California, a Chapter 13 filing is necessary.

Before you even consider starting the process of California bankruptcy, you should gather some documents. Things you should have include a list of your property, a list of your debt, a list of expenses, two years of debt, as well as records of finances and income. As you gather your paperwork, make sure you include documentation for outstanding credit card debt or loans, previous tax filing records, titles to automobiles, and titles to any property you own.

The next step in filing a California bankruptcy is to obtain the services of a reputable bankruptcy lawyer. This lawyer can guide you throughout the entire process, as well as aid you in obtaining the necessary forms needed in California to file for bankruptcy. The forms needed are referred to as “schedules”. Schedules help you in obtaining the documents you need in your case.

After you or your attorney has filed the bankruptcy documents, creditors cannot legally contact you in any way regarding the debts you have included in the bankruptcy case.

Many people feel that a bankruptcy prevents them from ever fulfilling their dreams of becoming a homeowner. This is not true; there are many companies that will extend you a home loan, even if you have filed bankruptcy in the past.

There are specific and specialized bankruptcy lenders that will work with you and provide you with bankruptcy home loans. However, there are some requirements. For example, in general, you must have at least a credit score of 500 or more, in order for a bankruptcy home loan company to consider you. These lenders will generally bend over backwards to help you in securing a home loan.

Here are some situations that generally apply for those wanting a home loan after bankruptcy:

1. You would likely only qualify for a maximum of eighty-percent financing. What this means for you, is that your down payment will be the twenty-percent that the loan does not cover.

2. It is also a requirement, for those wishing to obtain a bankruptcy home loan, to have a debt-to-income ratio of between forty-five to fifty percentile range.

3. You will likely have a higher interest rate than other people will. This should never stop you from obtaining the home of your dreams. However, as you begin to build your credit back up and improve your rating, you will have the option of refinancing at a later day for a lower rate of interest.

It is the goal of most people, to someday become a homeowner. Even if you have filed for bankruptcy, you are not prevented from achieving that goal in any way. Every one makes mistakes; the key is to learn from them.

You do have options and many mortgage companies are offering people, just like you that have filed bankruptcy a way to finally have their dream home. Bankruptcy is not the end of the world and it certainly does not limit you to only renting. Now, your rent can turn into a mortgage payment.