Filing bankruptcy is a debt solution of last resort, but remains an excellent way for American families to escape their money worries. Changing life circumstances, such as involuntary redundancy or ill health, can change a comfortable set of circumstances on its head. This is evidenced by the growth in personal insolvencies over the course of the last 12 months.
Research performed by Best Case Solutions showed that 85 per cent of those filing for chapter 7 bankruptcy have an income below the median level.
Filing bankruptcy can be useful for those who have mortgage arrears or have fallen behind with repayments on a car loan. Chapter 13 bankruptcy protection constitutes an excellent way of preventing foreclosure as it allows a homeowner to clear debts over a 3 to 5 year period before continuing to make normal monthly repayments.
Current bankruptcy law allows a debtor to select the type of insolvency that is best for their personal situation. The rules can be complex so it is advisable to secure the services of a lawyer to help with any general advice and associated paperwork. Both chapter 7 and chapter 13 bankruptcy will affect personal credit scores for a period of 7 to 10 years.
Consumers that are struggling with money worries may be interested in reading more about how different forms of bankruptcy can eliminate and reorganize personal debts. Other may wish to discover whether the subprime mortgage crisis really is at an end.
The overwhelming majority of people will be released from their obligations after a period of 12 months, perhaps less.
Your insolvency will be advertised in a local paper so it will become public knowledge.
If you have accrued gambling debts or have gambling problem you could have a Bankruptcy Restriction Order (BRO) imposed upon you. This may mean you are not discharged for up to and including 15 years.
You will not be able to work in certain professions, including the police force and government offices.
You will not be permitted to be or remain as director of a company.
Your personal finances will be heavily scrutinised.
The Number of People Filing Bankruptcy in America
According to the American Bankruptcy Institute, there were 1,074,225 people that decided that filing bankruptcy was the best way to alleviate their money worries. California had the highest figures with 86,678 opting for chapter 7 bankruptcy and a further 29,925 choosing chapter 13 bankruptcy. No matter how isolating insolvency makes a person feel, there are thousands of others in exactly the same boat.
What is Chapter 7 Bankruptcy
Chapter 7 bankruptcy involves passing over all non-exempt property to a trustee. The assets are then sold and the cash is distributed to creditors on a pro rata basis. The majority of debtors filing bankruptcy have no assets; this means that a debtor can get a fresh start relatively quickly.The chapter 7 means test:
It is possible to proceed with chapter 7 bankruptcy if the debtor's last 6 months pay checks are below the median income for that state. If an income is slightly higher than the state average, a lawyer may be able to identify certain expenses that could be used to offset earnings during calculations.Research performed by Best Case Solutions showed that 85 per cent of those filing for chapter 7 bankruptcy have an income below the median level.
What is Chapter 13 Bankruptcy
Chapter 13 bankruptcy involves paying off debts over a period of 3 to 5 years. This type of insolvency is the preferred option for those who have non-exempt assets that they don't wish to lose. It is only suitable for debtors that have a regular income that they can afford to contribute towards the debt solution.Filing bankruptcy can be useful for those who have mortgage arrears or have fallen behind with repayments on a car loan. Chapter 13 bankruptcy protection constitutes an excellent way of preventing foreclosure as it allows a homeowner to clear debts over a 3 to 5 year period before continuing to make normal monthly repayments.
Current bankruptcy law allows a debtor to select the type of insolvency that is best for their personal situation. The rules can be complex so it is advisable to secure the services of a lawyer to help with any general advice and associated paperwork. Both chapter 7 and chapter 13 bankruptcy will affect personal credit scores for a period of 7 to 10 years.
Consumers that are struggling with money worries may be interested in reading more about how different forms of bankruptcy can eliminate and reorganize personal debts. Other may wish to discover whether the subprime mortgage crisis really is at an end.
Is Bankruptcy the Right Option
If you asked a group of people to come up with a solution to a serious debt problem most would think of personal bankruptcy. Why is this the case? It is simply because most people aren't aware that there is any other way to deal with financial difficulties.The Positives
Declaring yourself bankrupt allows you to write off almost all debts, with the exception of taxation and student loans.The overwhelming majority of people will be released from their obligations after a period of 12 months, perhaps less.
The Negatives
If you own a property you will almost certainly lose it.Your insolvency will be advertised in a local paper so it will become public knowledge.
If you have accrued gambling debts or have gambling problem you could have a Bankruptcy Restriction Order (BRO) imposed upon you. This may mean you are not discharged for up to and including 15 years.
You will not be able to work in certain professions, including the police force and government offices.
You will not be permitted to be or remain as director of a company.
Your personal finances will be heavily scrutinised.
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