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A wide variety of circumstances can place virtually anyone in a
precarious enough financial situation that may merit filing bankruptcy.
Understandably, this can be a very scary thought for most individuals;
however, there are a number of resources available to help you. A good
start to understanding what your financial options are, including
bankruptcy claims, can begin with a cursory understanding of bankruptcy
Keep reading here and for additional information there are sites like
contact a bankruptcy lawyer.
Essentially, bankruptcy allows debtors to reorganize
themselves financially or discharge debts under the Bankruptcy Code.
Types of Bankruptcy
There are numerous types of bankruptcy; however, for most
individuals, bankruptcy claims will either be filed as Chapter 7 or
Chapter 13 bankruptcy. Under Chapter 7 bankruptcy, individuals will
attempt to discharge certain non-secured debts, as well as rectify
outstanding secured debts through the sale of assets. In most cases,
there are some debts that cannot be discharged and must be rectified,
including tax obligations, criminal fines, or other secured debts.
Specific assets like automobiles, retirement funds, and homes may also
be exempt from the sale of assets portion of Chapter 7 as well.
Consulting with a bankruptcy attorney can relay all of the specific
actions possible regarding your unique assets and debt obligations.
Chapter 13 bankruptcy, which is entirely different from Chapter 7,
does not involve the sale of any assets or the discharge of any debts
initially. Rather, Chapter 13 bankruptcy allows for the restructuring of
an individual’s finances in order to meet creditors’ demands, as well as
generally reduce the amount of harassment and threats from creditors. In
Chapter 13 cases, an attorney will work with a court-appointed Trustee
in ensuring all of your debt obligations can be repaid over the given
period of the restructuring plan.
Changes to Bankruptcy Law
In 2005, the Bush administration successfully pushed for bankruptcy
reform laws, which greatly changed the individual process for obtaining
bankruptcy relief. In the Bankruptcy Abuse Prevention and Consumer
Protection Act of 2005, stricter policies for filing for bankruptcy were
implemented, including submitting to an income means test, as well as
others. These tests are aimed at forcing debtors, with suitable means,
to pay outstanding debts over a period of three to five years, rather
than discharge them in a Chapter 7 bankruptcy.