Basics of Bankruptcy

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 in general. 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.

When meeting with a bankruptcy attorney for counsel, I can assist individuals in determining a clear outlook on their financial situation, as well as ascertain the probable outcome of petitions to file for Chapter 7 or Chapter 13 bankruptcy. If you have determined that filing for bankruptcy protection is the best means for addressing your outstanding debt obligations, I can offer you protection from creditor judicial sales, as well as generally harassing calls, letters, and other attempts to obtain debt repayment.

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