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Filing Bankruptcy!
by Alfred J.James
Published on this site: June 16th, 2006 - See more
articles from this month
Bankruptcy is a legal procedure designed both to protect an individual
or business that can't meet its financial obligations and to protect the
creditors involved. To begin the process, proper papers must be filed.
What are the Bankruptcy rates?
According to Scripps Howard News Service, nearly 1 in 60 housholds in
the United States are bankrupt. This figure is based on the nearly 2.04
million people who filed for bankruptcy before the new bankruptcy laws
took effect. Why is it so prevalent? Bankruptcy filings for the first
quarter of 2006 slowed to a 20 year low, although the number of bankruptcies
will expected begin to rise again later this year.
There are specific chapters of the federal bankruptcy law. Proceedings
under Chapter Seven (known as straight bankruptcy) involve taking most
of the borrower's property. The court appoints a trustee to sell off the
assets and distribute the cash among the creditors. Proceedings under
Chapter Thirteen (known as wage earner's bankruptcy) involve the borrower
proposing a plan for repaying a portion of the debt in installments from
the borrower's income. Chapter Eleven of the federal Bankruptcy Act is
generally used by corporations and not by consumer debtors. Its proceedings
are expensive and complex. Consumer debtors normally use Chapter Seven
or Chapter Thirteen.
Is the Borrower Liable?
Once the bankruptcy proceeding ends, the borrower is no longer liable.
This occurs when the bankruptcy court enters a discharge order in a Chapter
Seven case or the borrower has paid the debts due to the credit grantors
according to a plan in a Chapter Eleven or a Chapter Thirteen case. In
legal terms, the court has discharged the borrower from the debts. The
borrower then starts over again with a clean financial slate, but the
record of the bankruptcy will remain on the borrower's credit record for
up to ten years.
Bankruptcy may be the best, or only, solution for extreme financial hardship.
However, it should be utilized exclusively as a last resort, since it
always has long lasting consequences. Be sure to consult a financial expert
before resorting to bankruptcy as a means of solving your economic troubles.
New Bankruptcy Rulings
Our President signed a new act on April 20, 2005, entitled the Bankruptcy
Abuse Prevention and Consumer Protection Act of 2005. This act went into
effect on October 17, 2005. The new act is believed to be over 500 pages
long, and changes almost every aspect when it comes to bankruptcy cases.
Alfred J.James - Will Filing Bankruptcy Affect Your Family? More info
at http://FilingBankruptcy.eask.info
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