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What Exactly Is Bankruptcy About And How Can It Help Me?

Bankruptcy can be a fresh start for you and your family. It is designed to assist those who are in debt beyond a reasonable ability to repay.  Some of the possible consequences to filing for bankruptcy protection can be, long term damage to your credit score and a reduced ability to make major purchases on credit etc.  However, there are numerous programs offered by many banks that are geared towards assisting you after discharge (completion) of your bankruptcy to re-establish your credit. If your debt problem is overwhelming, bankruptcy is a legal and, for many, a sound financial choice.

The law states that a person is entitled to a fresh financial start  so long as they have not been dishonest in getting into debt. Bankruptcy will wipe out all of your unsecured debts and allow you keep most, if not all, of your property.

People find themselves facing financial difficulty  for many reasons: loss of employment, cut in hours or pay, business failure. Most people would avoid bankruptcy if they could, but like many things in life, sometimes bankruptcy just cannot be avoided.

Although  having to make the decision to file bankruptcy is not easy, you will survive. Over one million individuals file for bankruptcy protection every year. . 

Debt  can cause a variety of problems such as health, marital, physiological, work related and self esteem, just to name a few. In fact a recent medical study conducted by a major university shows that high debt causes health problems. Although bankruptcy is not a medical treatment, when your finances are back on the mend, your stress level often times becomes more manageable again. Upon the filing for protection under bankruptcy, the creditors are notified by the Clerk of the Court that a Automatic Stay ( federal restraining order) has gone into effect and they are not to call you, harass you or take any action against you or your property outside the Bankruptcy Court. No more harassing, 20 times a day calls! Our office, the day after filing also sends a similar Notice to your creditors in order to speed up restoring your peace!

      There are six chapters of bankruptcy that one may file. Please take note of the "CREDIT COUNSELING REQUIREMENT" below.  Click the link below the "PUBLIC NOTICE" to obtain a list  of approved Credit Counseling Agencies approved by the United States Trustee's Office.

About Bankruptcy
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Types of Bankruptcy, Chapter 9, Chapter 12, Chapter 15, Chapter 11, Chapter 7, Chapter 13
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Types of Bankruptcies

Chapter 9 is the chapter that municipal entities and railroad companies use when they file bankruptcy. Orange County, California filed a bankruptcy in the mid-1990s. Bridgeport, Connecticut also filed a bankruptcy petition. Individuals do not use Chapter 9.

Chapter 12 is the chapter that family farmers use. Individuals who do not own agricultural property do not use Chapter 12.

Chapter 15 is the chapter used by United States courts to administer assets of companies who have filed for bankruptcy protection in foreign jurisdictions.

Chapter 11 is the chapter that you probably hear or read about most often in the news; it is the high-profile chapter used primarily by corporations, limited liability companies and partnerships to reorganize their financial affairs. You are probably aware of such bankruptcy filings as TWA, United Airlines, Texaco, Macy's, World Com, K-Mart, and Enron. Individuals are eligible for Chapter 11 relief, but it is a time-consuming and expensive chapter, and therefore only appropriate for individuals whose circumstances make Chapter 7 or Chapter 13 inapplicable or inappropriate. Rarely is Chapter 11 the chapter of choice for an individual; under one percent of all bankruptcy filings are Chapter 11s.

Chapter 7 is a "straight bankruptcy" or "liquidation bankruptcy." It is the most common chapter; approximately two-thirds of all the bankruptcies filed around the country each year are Chapter 7s. In a Chapter 7 proceeding, the debtor is seeking a discharge, which is a document mailed to the debtor by the Clerk of the Bankruptcy Court toward the end of the case. The discharge is the document which essentially states that the debtor is no longer legally responsible for repaying his or her creditors. There are a few "prices" one pays for the privilege of receiving a Chapter 7 discharge.

Chapter 13 is often referred to as the "individual debt adjustment" chapter. It is the chapter selected in approximately one-third of all the bankruptcies filed around the country each year. As in a Chapter 7, the debtor is seeking a discharge, which is the document mailed to the debtor and all creditors by the Clerk of the Bankruptcy Court toward the end of the case advising that the debtor is no longer legally responsible for repaying discharged debts. In a Chapter 13 proceeding, the debtor is essentially saying to his or her creditors that his or her household generates a certain sum, such as $4,000 per month, that it spends a certain sum, say $3,600 per month, on its normal going forward obligations such as rent or mortgage, car payments, utilities, food and groceries, insurance, medical, transportation, etc., and, accordingly, has net funds of say $400 left over at the end of each month to offer to repay to the pre-bankruptcy creditors, all of whom are put on the proverbial back burner when the bankruptcy petition is first filed. The Chapter 13 plan states that for a fixed period of time--a minimum of thirty-six months up to a maximum of sixty months--the debtor will forward the net cash surplus, $400 in the example used above, to the Chapter 13 trustee assigned to the case, and the trustee will distribute the funds on a monthly basis to creditors pursuant to the terms of the proposed "plan," which is an approximately ten page "fill in the blanks" style document which divides creditors into certain groups or classes. For example, if the debtor is behind on his or her mortgage payments, the mortgage company will be in a certain class. Other secured creditors, such as car lenders or lessors, may be in their own class. If the debtor owes recent taxes to a governmental tax agency, the tax agency will be in a certain class. All general unsecured nonpriority creditors will be together in another class. If after the specified plan period, whether it be thirty-six months, sixty months, or some period of time in between, the debtor has made all of his or her plan payments, he or she will receive his or her discharge at the conclusion of the case.

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