Bankruptcy Chapter 7 13

Bankruptcy is not a dirty word. It exists as a means to provide a financial “fresh start” for consumers and businesses experiencing financial hardship that seriously affects their ability to function and thrive. It is not an easy way out of credit card liability or responsibility for debt, but an opportunity for somewhat of a clean slate. Its purpose is to provide a means for those overwhelmed with debt and out of options to begin anew and regain self-sufficiency. Bankruptcy is often a last resort, but a much smarter option than suffering in vain until complete financial ruin.

Recent laws have made changes in the process of filing for bankruptcy, but contrary to popular belief, have not made it more difficult for consumers to file for bankruptcy protection. While the paperwork is a bit more intensive, most of the process has not changed. For the most part, the preparer of the petition just has to do more legwork before filing, so consumers are encouraged to gather all of their current financial records to aid in a seamless and speedy filing.

Individuals usually choose between a Chapter 7 or Chapter 13 bankruptcy filing, referring to the chapters of the Federal Bankruptcy Code under which their case falls. Chapter 7 bankruptcy, often referred to as liquidation, does not require repayment to any unsecured creditors, or those who do not have claims to any of the debtor’s property. Chapter 13, which is commonly known as debtor’s court, or the wage-earner’s plan, is a restructuring of debts, which usually requires at least some repayment to unsecured creditors.

Bankruptcy attorneys offer advice to potential filers as to which plan to file, whether it is the only of the chapters the debtor qualifies for, or the one most beneficial to the debtor. Though it is possible for a consumer to file a bankruptcy pro se, or on their own, or even with the assistance of only a bankruptcy petition preparer, it is recommended that people considering bankruptcy seek the advice of a bankruptcy lawyer. In addition to advising on which chapter to file under, there are many post-filing occurrences and other possible events that benefit for legal assistance.

In bankruptcy, regardless of which chapter, the debtor (or if a joint filing for married couples, both debtors) must list all creditors, regardless of the intentions for the debts. Debtors may choose to reaffirm debts, meaning they keep or renegotiate the debt with creditors, rather than lose property secured by the debt. They may redeem debts, meaning they have the funds to pay the full amount owed. Or, they may choose to surrender property, returning it to the lender as payment in full for the debt.

Bankruptcy law encourages what is in the best interest of the debtor, and of the debtor’s estate, which is the debtor’s property and what the bankruptcy trustee represents in bankruptcy court. It also oversees the effect on the creditors, to assure that they are afforded at least what they would if all assets that are not protected by exemptions were liquidated and distributed among them. Fortunately, bankruptcy laws, whether federal or state, allow exemptions for debtors so that they may keep property and assets essential to them, such as clothing, books and pictures, certain amounts for household goods, vehicles, retirement and the debtor’s homestead. Chapter 13 protects assets even more vigorously, provided the debtor can repay at least some unsecured debt within an 36- or 60-month plan.

Though bankruptcy is important protection for debtors because it ensures that debtors are no longer pursued by creditors seeking repayment at all costs, such as harassing phone calls, wage garnishments, or liens, it is also important because it provides a means for people to reclaim their lives as viable caretakers of their own lives and property. Bankruptcy, through its automatic stay, the law that immediately upon the petition filing protects the debtor from any and all collection attempts, begins the process of allowing debtors – regular people that have become unable to keep up with repayment of creditors – to finally reclaim some financial independence.

Nothing to be ashamed of any longer, bankruptcy is finally recognized for what it is: a legal right for regular people to emerge from under mountains of debt to start their lives over, without the worry that creditors will seize property, sue for judgments, or garnish wages. Bankruptcy provides the means for a true “fresh start.”