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What Bankruptcy Means To You

By Dr. John Lesher
 

Note from the writer: Bankruptcy is a serious problem, and takes more then just this one page. On the bottom of this article you will find a link that will take you to additional articles on this subject. PLEASE investigate all your options. As you may well know, the Internet is a great source to investigate any topic. On most pages on the Internet, you will find addition links that also give you a valuable information to investigate Bankruptcy from other sources. Be Informed

Bankruptcy In General
 
When should you consider Bankruptcy as an option? This is one of the hardest decisions you could have to make in your lifetime.
 
When you file for Bankruptcy your debts will be dissolved by splitting up your assets among those you owe money to. If you file for Bankruptcy your debt could be dissolved regardless of whether your debts have been paid in full or not. By filing for Bankruptcy you acknowledge that you are not able to pay your debts and must be relieved from having to pay off your unsecured debts.
 
But note that not all debts are cleared. For example, under Chapter 7 public fines and debts due to an individual’s misbehavior such as drunken driving are not allowed. In addition, some tax claims are exempt as well as child support and alimony. Some debts that will not be cleared by Bankruptcy are guaranteed educational loans or debts for certain condominium or cooperative housing fees. An individual may be able to reorganize some of the debts listed if filing Chapter 13.
 
 
Filing for Bankruptcy
 
If you are already being hounded by bill collectors, a Bankruptcy filing may actually, over time, improve your credit rating by eliminating your debts and getting you back on track financially. Obviously your credit report is one of those factors, and so obviously filing personal Bankruptcy will have a negative impact on your credit report, and your ability to borrow. The attorney (if you used one) filing the paperwork for the Bankruptcy does not automatically or necessarily amend the credit report.
 
Which category of Bankruptcy you fall under will depend upon how much debt you have, the type of debt and whether you are filing for a business or individual. Record numbers of people are filing for Bankruptcy each year.
 
When you can’t pay your debts, filing for Bankruptcy is one option. If you want to avoid filing for Bankruptcy, find out if you can sell some of your valuables to recover some money. Filing Bankruptcy can cause your credit rating to go down.
 
Bankruptcy Chapters
 
Basically, filing for Chapter 13 Bankruptcy indicates an intention and willingness to make good one’s debts within five years. The two fundamental kinds of Bankruptcy in the United States are Chapter 7 and Chapter 13 Bankruptcy, which have been explained in some detail earlier. Specifically, a court fee for filing for Chapter 7 Bankruptcy is $274, $1,039 for Chapter 11, $239 for Chapter 12 and $139 for Chapter 13.
 
Someone filing for Chapter 7 Bankruptcy will usually have no direct dealings with a judge, while someone filing for Chapter 13 Bankruptcy will appear before a judge at the official plan confirmation. As mentioned earlier, personal Bankruptcy can be filed for under Chapter 7(for almost complete elimination of debts) and the more conditional and restrictive Chapter 13 of the federal Bankruptcy code. The laws that deal with such cases are federal Bankruptcy laws or Chapter 11 and Chapter 13 laws.
 
One advantage of filing under federal Bankruptcy law instead of under Chapter 7 is that this does not require the liquidating of the company.
 

New Bankruptcy Law
 
In April 2005, Congress made sweeping changes in U.S. Bankruptcy law that went into effect on October 17, 2005. It's called the "Bankruptcy Abuse Prevention and Consumer Protection Act of 2005," and it means big trouble for Americans struggling with debt problems.
When you declare Bankruptcy, you are required by law to list all your assets with the Court. Regardless of the reasons, Congress has made the changes, and millions of Americans have been affected when the new law took effect on October 15. The new Bankruptcy law took effect in October 2005 that made it harder and more expensive for most families to file for Bankruptcy and discharge their debts. The bill promised sweeping changes to Federal law, and will make it much harder for the average consumer in financial trouble to have their debts wiped out by filing for Bankruptcy.
 
 
How To Avoid Bankruptcy
 
There are many steps you can take in effort to improve your credit, eliminate your debt, and avoid Bankruptcy. Debt consolidation is another Bankruptcy alternative that many could consider. By consolidating your debts into one low monthly payment you could easily reduce the amount of your debt, get the creditors off your back and avoid Bankruptcy. If you have tried every way imaginable to avoid Bankruptcy but find that you have no other way out of the situation, the first step you should take before filing is to consult with a Bankruptcy attorney.
 
Finding An Lawyer
 
You should choose a lawyer that takes care of your case in a respectful, caring and ethical manner, and protects your legal rights, assets and personal rights. A lawyer may also be able to advise a client on whether consumer credit counseling may be a better alternative than a declaration of Bankruptcy. A Bankruptcy lawyer represents you in court, as well as helps you understand the complications involved in filing Bankruptcy. Interview the attorney and make sure you feel comfortable with the person before hiring the attorney.
 
Combined with the cost and potential loss of property it is something that takes an experienced lawyer who understands that each case is different and will offer counseling to the client instead of rushing to court. Check with your local Lawyer Referral Services for recommendations.

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