Bankruptcy Bliss

Bankruptcy is a process where debts are legally elliminated from ones life. The court is the only one that can grant or deny a petition for Bankruptcy. There are two main types of bankruptcy that can be filed. The first, chapter 7 is when part or all the debt of an individual or business is wiped out completely and a chapter 13 is when the debt is restructured to make new payment schedules over a longer amount of time.Either way bankruptcy is a very private matter and should not be entered into lightly. Weigh your options carefully.

Understanding the Basics of Bankruptcy

Bankruptcy is a legal process through which people and businesses can seek to obtain a fresh financial start when they are having financial difficulties and are unable to pay their debts as agreed. When a person files for bankruptcy, a court eliminates either or part of the existing debts under chapter 7, or stretches out the monthly payments on existing debts under the courts protection and supervision under chapter 13.

The process is also designed to provide a measure of protection to creditors. Secured creditors are often in a better position than unsecured creditors because they hold lien on the property of the debtor that supports the right to payment.

Whole your bankruptcy case is pending, most creditors cannot try to collect their debts from you directly. They also may not attempt to collect any and all discharged debts excused by the court. However, not all debts are discharged.

There are several causes of bankruptcy. Approximately 90 percent are the result of unemployment, medical bills, or divorce. Every individual situation is different, though a common feature of many bankruptcies are a large amount of debt or credit cards with high interest rates. Filing for bankruptcy is a very personal, serious decision. Most people file when they see no other way out of debt. Once the decision has been made, the company or individual may declare bankruptcy by petitioning the court. This is a request for protection and relief under the bankruptcy code. The person filing for bankruptcy must provide information about his and her assets, liabilities, income, and expenditures. They also must verify that they have undergone credit counseling within the allotted time.

There are several advantages to filing for bankruptcy. The key factor is a fresh financial start. Another is that the moment you file, most collection efforts stop immediately. Filing for bankruptcy can also have no bearing on your employment status.

Bankruptcy stops most garnishments, although it depends on why you’re being garnished. What you will be allowed to keep will depend largely on your state laws. Some states allow you to keep all of the equity in your home, while others exempt a certain amount.

If you decide to file, you definitely need an experienced bankruptcy attorney. Steer clear of petition preparers, typing services or paralegals. And if you are even considering filing on your own, remember the old adage that a man who acts as his own attorney has a fool for both an attorney and a client.