Bankruptcy Laws

Bankruptcy Laws No matter what state one is located in, understanding the complicated bankruptcy laws can be very hard. Bankruptcy law changes at time and staying on top of the current bankruptcy laws can prove to be incredibly difficult. However, there are certain standards that everyone who is filing bankruptcy should know about. Although bankruptcy law varies slightly from state to state, the types of different bankruptcies that exist remain the same, as well as a person’s eligibility to file bankruptcy. Other standard bankruptcy laws are the debts that can be included in the bankruptcy, how to withdraw a bankruptcy application, and the effects of the bankruptcy on ones credit. Ways to rebuild credit are also considered to be fairly standard, especially when it comes to Chapter 13 bankruptcy.

• Under bankruptcy law, there are six different types of bankruptcy. Some types of bankruptcy, like Chapter 7 and Chapter 13 are ones that are filed frequently while others types of bankruptcy are lesser known. Chapter 7 bankruptcy is considered to be a liquidation bankruptcy. This is because bankruptcy law requires one to liquidate their assets in order to pay back certain parts of their debt. While a large amount of an individual’s assets may have to be liquidated, the things that individuals usually consider to be the most important material possessions can usually be kept. Bankruptcy laws allow for one to hold onto their house, household possessions and cars. With a Chapter 7 bankruptcy, most of an individual’s debt is taken away and other types of debt must be paid off. The debts that are paid off and the debts that one is excused from vary depending on the situation of the person. While Chapter 7 bankruptcy is similar to Chapter 13 bankruptcy, the two have different means of debt pay-off under current bankruptcy laws.

• Chapters 9 bankruptcy is not as well known as other bankruptcies. Bankruptcy laws allow for a city, a county and even a town to file for bankruptcy. If a town or city hits some financial obstacles, they may decide to file for Chapter 9 bankruptcy. This type of bankruptcy restructures particular debts that the location has. Unlike other types of bankruptcy, a Chapter 9 bankruptcy does not allow for asset liquidations. Bankruptcy laws dictate that the area will pay back any debt it has in installment payments without the possibility of liquidating any assets. This way, the people living in the area will not have their lives completely disrupted by a wave of budget cuts. It is the easiest way for an area to rebuild itself financially without disturbing the residents tremendously. Chapter 11 bankruptcy laws allow for a business or corporation to hold onto their assets and products while they struggle through their financial difficulties. Bankruptcy law allows for businesses to get back on their feet by downsizing or using different methods to pull themselves out of their economic slump. Downsizing is dreaded by workers and is also a very common practice for businesses to regain financial footing. Unfortunately, many workers can be hurt in the process.

• Chapter 12 bankruptcy gives farmers and fisherman a period of time to pay back their debts. The time period is usually three to five years. Chapter 13, another common form of bankruptcy allows for an individual to get on a credit re-payment program as they are watched by the ones the courts dictating bankruptcy laws. Secured debt and houses are allowed to stay in the possession of individuals filing for Chapter 13 bankruptcy, which makes it a popular form of bankruptcy to file for. Bankruptcy laws usually give the individual a period of five years to pay back the debts owed to creditors. The final type of bankruptcy is Chapter 15 bankruptcy. This little known form of bankruptcy allows for individuals who have assets and liabilities in more than one country to reorganize their debt.

Chapter 7, like Chapter 13 bankruptcy law allows one to have certain debts wiped out, while others stay on the person’s record. However, Chapter 13 bankruptcy laws allows for an individual to dismiss certain debts that an individual cannot dismiss in a Chapter 7 bankruptcy. Chapter 13 does however require full repayment of these debts eventually. Chapter 13 is considered to be a reorganizing of debt rather than a dismissal.

• Bankruptcy laws for both Chapter 7 and Chapter 13 allow for credit card debt to be included in their bankruptcy. Since credit card debt is not secured, it is possible that the credit card companies will fight the bankruptcy law that allows for one to include credit card debt in their bankruptcy. Credits card debt is one of the main types of debt that people include in their bankruptcy when they file. This is because so many people get in over their heads when dealing with credit card management. Unlike credit cards, mortgages and vehicle loans are secured. This means that they are worth their value. Usually, if someone stopped paying their mortgage, the bank would foreclose on their house. Current bankruptcy law keeps an individual’s home out of foreclosure while a debt re-payment schedule is worked out, or the bankruptcy discharge is finalized.

• Another common reason for people to file bankruptcy is because of an illness or accident that require huge medical bills to be paid. Some of these bills might have been paid and the individual does not have the money to pay for the rest. Others cannot afford the bills at all and file for bankruptcy in order to keep from being sued and losing all of their money. Even dental debts can be included, although it is more likely for medical bills to be included. Bankruptcy laws allow for an individual to work out a repayment with each debtor, whether it be the hospital or a collection agency. As one can see, bankruptcy laws allow for many types of debt to be reorganized. There are some debts that Chapter 7 will not discharge, although Chapter 13 bankruptcy will reorganize the repayment of several.

• Bankruptcy laws do not allow for student loans to be discharged in Chapter 7 bankruptcy. Some other types of debt they will not discharge are any debts that were accrued because of unlawful activities. These may be criminal or fraudulent fines that one has to pay, as well as tax debt that was supposed to have been repaid. Chapter 13 will allow for the dismissal of some of those, but bankruptcy law requires the charges to be examined before they are turned into reorganized debt to be repaid. Usually, even loans that were given to individual’s to pay those things will not be included in the Chapter 7 bankruptcy under bankruptcy law. There is no getting around the fact that there are certain debts one just can not discharge with Chapter 7 bankruptcy. Debts of that nature require one to make a complete and full payment. Otherwise, the person will be subject to tax liens, wage garnishment or foreclosure, even if the bankruptcy laws had allowed for a previous foreclosure to be postponed. Bankruptcy law also can not help an individual discharge their back child support or alimony payments, out of fairness to the ex-spouse and child.

Filing for bankruptcy is a big step that one should not rush in to. Although there are benefits to filing for bankruptcy, it is still a decision that requires thought. It would be in one’s best interest to consult with a professional attorney before they decide to begin any bankruptcy proceedings. Bankruptcy laws have changed within the past few years, becoming stricter about people paying back their debts over periods of time. While bankruptcy can help a person to get back on their feet, filing may also ruin an individual’s credit for years. One should consider filing for bankruptcy if they find themselves unable to pay their mortgage, car payments or other debt. Bankruptcy law requires that a bank stop foreclosure proceedings temporarily. A home is one of the worst things a person can lose to a bank. However, it is also important to keep in mind that a bankruptcy will stay on one’s credit for ten years. Within that ten years, it will be very difficult to have any financial dealings. If one does get the chance to buy something with credit, the interest rates on the debt will be incredibly high. Besides Chapter 7 and Chapter 13, Chapter 9 bankruptcy is another form bankruptcy that should be filed as a last resort.