AVOID BANKRUPTCY

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Bankruptcy law was created to protect American consumers who had
found themselves hopelessly in debt. It was debt relief granted to those
parties who otherwise would never get out of debt.

The Bankruptcy filings in America have hit record proportions. In every state
and by every social status imaginable discharges of debt are being granted
while, at the same time, new petitions are being filed. It has become such
a common practice within our great nation that attitudes once poised to
frown with disdain upon such actions now simply accept it as the inevitable
consequence of American living.
There are even professional filers who have fine-tuned the art of debt
relief in an attempt toward the acquisition of material and financial gain.

There are several types of filings including Chapter 7, Chapter 13,
Chapter 11 and Chapter 12. Most consumers file a Chapter 7. A few
individuals file a Chapter 13.
The laws governing all bankruptcies are complex. Although individuals
may, of their own accord, file a petition, it is advisable that the services of
an attorney be retained.
Consumers may use Legal Match to find a trustworthy Bankruptcy
Attorney in their area.

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Chapter 7 Bankruptcy

In Chapter 7, most debts are cancelled completely. This is called a
"discharge".
Medical bills and unsecured loans can usually be eliminated or
"discharged" in full. Once a debt is discharged, the creditor is forever
prevented from taking any action to collect the debt. Bankruptcy laws
provide for certain exemptions. If the value of your equity in your property
is less than the exemption amount, you will be allowed to keep it.
If the value of your equity in your property is more than the exemption
amount, you might be forced by the court to turn it over to the bankruptcy
trustee who will sell it and use the money to pay on your debts. In most
cases, you will be able to keep all of your property. The rules are different
for secured loans, such as homes, cars, boats, RVs etc.
With some minor exceptions, you must either pay for the collateral that
secures the loan or give it back to the creditor. 
 

 Chapter 13 Bankruptcy

In Chapter 13, you basically consolidate your unsecured debts and make
one payment to the bankruptcy court for a period of 3-5 years. A small
amount of the money you pay to the court is used for court expenses;
the remainder is used for payment to your creditors. Any balance of your
debts which remains after the end of the 3-5 years is discharged.
A Chapter 13 bankruptcy may allow the debtor to keep property where its
value exceeds the exemption amount. It can also allow the debtor to pay
past due payments on a house or a car and still retain the property.
Sometimes, secured creditors can be forced to accept less than the full
balance owed if the collateral is worth less than the amount owed.
However, the reason that most people do not file a Chapter 13 bankruptcy
is that two of the main requirements are that you must have a steady
income and your monthly net income must be more than your monthly
living expenses (not including credit cards and old medical bills, etc.).
This is an area of the law where you need to have expert legal advice.

For complete detailed legal information on bankruptcy, Including procedure
and bankruptcy forms, see the Legal Information Institute or contact us
with bankruptcy questions.

Consumers should also be aware of the new bankruptcy bill that was
passed in 2005 that brought many changes to bankruptcy law
and additional hardship for any consumer considering filling.

We have two articles on the subject:

Considering Bankruptcy and Pass New Bill
 

A note from the author:

Any person seeking debt relief through bankruptcy should do so only as a
last resort and be aware of the many negative effects it will have on them
and their family before proceeding.
While it is a relief to get rid of debt the filer needs to understand:

• Employment may be adversely effected

• Not all assets are automatically protected

• Not all debts are dischargeable

• The bankruptcy remains on your credit report for 10 years

Consumers should consider Bankruptcy only in extreme hardship situations.
Otherwise, consumers in need of help will benefit more from a
Debt Consolidation program, that will allow them to pay down debt and keep
a good credit history.
A free consultation and quote can be obtained by filling out a short form here.

Arnold Weiss
Bankruptcy Attorney

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