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Personal Bankruptcy
Personal bankruptcy falls under the federal law where the filer is hopelessly burdened with the debts which he/she is unable to pay. There are laws to provide relief to such persons of the debt with some exemptions provided by the state or under the federal exemptions. People think of personal bankruptcy because of they are about to submit to the harassment from the creditors to the debt one owes, excessive medical bills, credit card debts, etc. However one has to think of the options before filing a personal bankruptcy because it has a lot more effect on . Besides your history also gets a bad remark which affects the .
At present due to changes in the law since spring of 2005 it has become even more difficult to file for personal bankruptcy as some of the rules have changed. One can still file in if he or she thinks can suit the criteria by providing the necessary documents for tax payments over the last two years, satisfies a means test, etc. The emphasis was to force people who can pay for their debts, instead of discharging their debts. Since personal bankruptcy makes a person free of all or part of debts, the creditor should not go at the dripping end.
Personal bankruptcy can be ctegorized in two parts
- Reorganization:
Chapter 11, chapter12, chapter 13 are the bankruptcy types that are considered to prove reorganization for the business or an individual by giving him time to pay the creditors.
- Liquidation:
Chapter 7 bankruptcy provides this facility by selling the non exempted assets to pay off the creditors once and for all.
Both provide a fresh start to the person filing bankruptcy.
After filing for the bankruptcy it is illegal for creditors to call up the debtors for the payments. If so happens one can let the creditor know that he/she has filed a personal bankruptcy. Also the credits after filing bankruptcy are reduced and one has to fight to stand up for at least 2 to 3 years. The bankruptcy stays on the credit report for a decade.
Also to mention one can also consider the alternatives to bankruptcy and how one can avoid it as the bankruptcy process can also put you into some crunch situations such as after filing for chapter 13 one is unable to make a payment as per the plan, then one finds himself into paying the same amount of debt he was liable to before filing the bankruptcy, as court considers this as a dishonor, and may dismiss the case.
Other useful links
[How To Avoid Bankruptcy] | [Bankruptcy Alternatives] | [Bankruptcy Chapter 7]|[Bankruptcy Chapter 13]
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