Filing Bankruptcy!
Alfred J.James
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
households 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.
About The Author: Will Filing Bankruptcy Affect Your Family?
More info at
http://FilingBankruptcy.eask.info
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