Bankruptcy – Is It Your Best Option?
Bankruptcy is perceived by most people as the ultimate failure. Unfortunately, for thousands of Americans, it’s the only alternative they have for storing their belongings. It arouses considerable emotion and leaves people feeling ashamed. But it shouldn’t.
Bankruptcy dates back to the Old Testament and the Laws of Moses, which states that every fifty years all debts are wiped out. The Hebrew Law of Forgiveness instructs the release of debt every seven years. So why in today’s society does filing for bankruptcy make us feel like we’ve committed a sin?
There are six types of bankruptcy chapters including: Chapter 7, 9, 11, 12, 13, and 15. The two most common include Chapter 7 and 13. Chapter 7 requires the filer to surrender his or her property not exempts a bankruptcy trustee. . The Receiver oversees the sale of the property and uses the money to pay off outstanding debts.
Chapter 13 bankruptcy allows people to keep their property, including homes and vehicles. However, a payment plan must be approved by a bankruptcy judge. If the person fails to get out of bankruptcy, creditors can move to repossess the property. Payments must be made to a Trustee who oversees the account until all debt has been paid in full.
Bankruptcy laws changed significantly in 2005. Many people abused the system and filed for bankruptcy to pay off frivolous credit card charges. The Bankruptcy Abuse Prevention and Consumer Protection Acts require that “Americans who have the ability to pay shall pay at least a portion of their debts.” Additionally, BAPCPA requires an eight-year waiting period before individuals can reapply.
Bankruptcy is governed by the federal laws of the United States. However, each state is governed by its own set of bankruptcy laws. If you plan to file for bankruptcy, you will need to follow the laws of your state. Petitions must be filed in the district where you reside and approved by a district bankruptcy judge.
Whenever possible, try to work out a payment plan with your creditors and avoid filing for bankruptcy. Depending on your circumstances, creditors may accept less than what is owed on your debt or renegotiate your payment terms or interest rate. Increase your chances of a successful transaction by offering some money up front and a reasonable payment plan.
If bankruptcy is your only option, it is best to retain the services of an attorney who is well-versed in bankruptcy law. Doing so will ensure the proper documents are filed and improve your chances of having your application approved by the court.