Personal Bankruptcy Questions

For those of you who are considering filing bankruptcy and have no idea where to begin, this article will give you some facts about bankruptcy to get you started. First of all, I’m assuming you’re interested in US bankruptcy law, so we are referring specifically to Americans who may need to declare personal bankruptcy.One of the first things you should know is that personal bankruptcy filings are handled by a federal bankruptcy court. This is a separate court from the US District Court (which is what most people think about when they hear the term federal judge), but bankruptcy is still considered a federal case and is under the regulations enacted by Congress.

This brings us to our second point regarding federal bankruptcy law, which is that Congress made some revisions to the bankruptcy code in the year 2005. This bankruptcy reform law has many people thinking that declaring bankruptcy isn’t really an option anymore in the United States, but this is a complete misconception. Bankruptcy continues to be an option for those who are overwhelmed with their debt problems, even though the process has become more complex.

You should know that there are two main types of bankruptcy that consumers can try to take advantage of, and these are known as Chapter 7 and Chapter 13. (Not that it matters much, but if you’re wondering about the names, this is taken from the sections of the bankruptcy code itself.) Chapter 7 is also known as liquidation, because the debtor will have to liquidate nonexempt assets in order to pay for the unpaid bills, and in exchange for this many or all of the remaining debts will be wiped out.

The good news (or bad news depending on your perspective) is that people who file Chapter 7 usually don’t have many assets to speak of, or at least nonexempt assets. If Chapter 7 is not an option, or if you are trying to keep your house after being behind on mortgage payments, then you might want to consider Chapter 13. This type of bankruptcy creates a payment plan instead of trying to eliminate your past obligations. Whatever you decide to do, it’s important to discuss your options with a good bankruptcy lawyer before determining what you will do for your future.

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