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In Chapter 7 or ‘straight’ bankruptcy, the applicant surrenders all non-exempt property and assets to an appointed bankruptcy official. These are converted into cash and the proceeds are disbursed to the applicant’s creditors.

This process of liquidation then results in the applicant being freed of all financial obligations within a short period usually not exceeding four months. Obviously, this provision has seen a lot of abuse in the past. The new laws now state that an individual cannot re-apply for Chapter 7 bankruptcy unless he/she has been given discharge from a previous filing for it for at least eight years.

In applying for Chapter 13 bankruptcy, the applicant indicates that he/she intends to repay his/her debts over a period of time. This period may vary from three to five years. Chapter 13 bankruptcy is the preferred kind for applicants who cannot prove complete and irreversible financial insolvency, meaning that they have a source of income that allows them to eventually settle their debts.

Chapter 13 bankruptcy also protects non-exempt property from liquidation and allows the applicant to retain ownership of it. The new bankruptcy law amendments, effective from October 17, are oriented towards encouraging the maximum possible repayment of debts and make it mandatory for certain applicants to file for Chapter 13 bankruptcy.

Chapter 11 or corporate bankruptcy is typically applicable to business entities that wish to restructure and reorganize. Chapter 12 or family farming bankruptcy was a variation formulated in 1986 is applicable to people or qualify as ‘family farmers’. Functionally, it is similar to Chapter 13 bankruptcy, except that its offers a higher debt ceiling than Chapter 13 does for wage earners to people or families who depend on farming for their livelihood.

US Government recently approved a bill that brought about some major changes in the bankruptcy laws on April 20, 2005. The bill is called the “The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005″. As per this bill, about 25 changes have been made in the existing bankruptcy laws. However, since it takes at least 6 months from the time the bill is passed for it to be put into action, only some parts of the law have become effective. Hence, all the rest of the new laws are yet to be put into effect.

It’s a common expert opinion that these new laws will definitely narrow the possibilities of filing a bankruptcy using Chapter 7. The court [...] Continue Reading…

When someone has high debt and no other feasible financial mode of repayment, they may need a fresh start in form of a bankruptcy.

People file for Chapter 7 bankruptcy more often than any other type of bankruptcy, and it accounts for almost 65% of all consumer bankruptcy filings.

A Chapter 7 bankruptcy is often also preferred to a liquidation or a straight bankruptcy. The process of liquidation transfers one’s possessions to funds. This course of action necessitates the appointment of a trustee. The court assigns a trustee who accumulates all non-exempt material goods, put them up for sale and the money he so collects is distributed among the appropriate creditors. On the other hand, contrasting to other bankruptcy filings, [...] Continue Reading…

If you are having difficulties with finances and are considering debt consolidation or bankruptcy, you may also be considering hiring a bankruptcy lawyer. Of course for those who are in a financial rut or on the verge of financial ruin, coming up with extra funds to pay a bankruptcy lawyer can be downright impossible. Despite the shortage of money, it is often best to still consider at least consulting with a bankruptcy lawyer before you begin the process.

The main purpose of a bankruptcy lawyer is to help an individual or business go through the legal procedures for filing bankruptcy. Lawyers are meant to help deal with creditors, meet with the court systems to set up payment plans or repayment [...] Continue Reading…

Individuals can file for personal bankruptcy as a last ditch effort when their credit reaches the limit.

This helps them clear out a few debts by selling their assets and starting a whole new life without creditors beating at their door. The gives them an opportunity to start afresh without credit worries since creditors have no more right to press collection charges.

Presently, individuals can file for bankruptcy under Chapter 7 or Chapter 13. Chapter 7 involves liquidating all the assets to pay off the creditors. Chapter 13 involves registering a plan to pay of the creditors from the monthly wages of the debtor within a specified amount of time. However, new laws passed by the President in 2005 might [...] Continue Reading…