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
frown with disdain upon such actions now simply accept it as the
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.
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
Consumers may use Legal Match to find a
Attorney in their area.
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Chapter 7 Bankruptcy
In Chapter 7, most debts are cancelled
completely. This is called a
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
will be able to keep all of your property. The rules are different
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
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
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
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
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
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
and additional hardship for any consumer considering filling.
We have two articles on the
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
Not all assets are automatically
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
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.