While many people believe that bankruptcy is their personal punishment for not being able to responsibly handle their credit obligations, others may see it as a way out of a problem that was not necessarily of their own creation. Many individuals will struggle financially for years hoping to avoid the stigma they believe is attached to what is bankruptcy.
Essentially, bankruptcy under new laws is a way for people to get out from under a burden of debt that is preventing them from meeting their daily living needs. It can be caused by a variety of issues such as loss of income, unexpected high medical bills or the failure to be responsible with their credit. Having too much available credit often leads people down the road to what is bankruptcy and they can end up using one credit card to make the payments on another one, until there is no more credit available.
After they have tried to work with their creditors and possibly gone through credit consolidation resources they find that when they pay all of the required monthly payments there is no money left to pay for their basic living expenses, they seek protection from creditors under the federal bankruptcy law.
When it has been determined that they cannot pay for food and shelter and basic needs while paying for loans, they can file bankruptcy to eliminate all other obligations and start their life over again. Their standard if living will need to be adjusted to meet their available financial means, but they will not have to worry about paying any of the debt once it has been discharged through bankruptcy.
Today’s Internet has a plethora of information available simply by typing in a few words or phrases. However, those with bankruptcy questions will be better served by speaking to an experienced attorney to help sort through the complicated laws. While bankruptcy is governed by federal law, there are a few items that can be covered by state laws, such as exemption limits on personal property and are just one of the bankruptcy questions an attorney can quickly answer.
There may also be more bankruptcy questions about the new laws in effect that essentially did not change the statutes, but made it more strict about qualifying for a Chapter 7 bankruptcy as opposed to a Chapter 13 in which the debtor enters into a court supervised repayment plan. The benefit of a Chapter 13 is that people get to hold onto their possessions that are used as collateral for a loan, such as a car or a house.
Under a Chapter 7 bankruptcy petition most of the petitioner’s assets, above the exemption limit are subject to confiscation and liquidation to offset the amount owed to debtors. How the money is divided among creditors is subject to the rules of bankruptcy are bankruptcy questions best left to an attorney to answer.
While information on bankruptcy is readily available, most attorneys will offer a no-charge meeting to answer all bankruptcy questions a potential petition may have. There may also be many questions about the procedures used in court on the day the debtor goes into court to finalize the process.