File Personal Bankruptcy
Bankruptcy as a last resort
It is as a last resort action, after all possible avenues for servicing your mounting debts have been exhausted, that you may decide to the take the inevitable action – to file personal bankruptcy. It is true that the situation that leads to file personal bankruptcy may not be the sweetest of memories at the least, and is likely to be a highly stressful experience. For one, your credit ratings are bound to take a beating with the move to file personal bankruptcy. However, the entire idea of the personal bankruptcy law providing for this facility to file personal bankruptcy is not to damage your credit rating but to give you an opportunity to start fresh, when your debts have been rising faster than what you can effectively manage.
Before you decide to file personal bankruptcy, you need to realize that it is not an easy call and you need to get in touch with a qualified bankruptcy attorney who would study your situation and advise you of alternative courses of action, if any. And when you finally zero in on bankruptcy as your last resort, the process to file personal bankruptcy is kicked off with an application, submitting along with it, a comprehensive statement of the assets you hold and the liabilities that you owe. You may also have to submit the details of your creditors.
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Chapter 7 and Chapter 13 Bankruptcy
There are two ways to file personal bankruptcy – and those are provided for in the bankruptcy laws as Chapter 7 bankruptcy and Chapter 13 bankruptcy. In the case of Chapter 7 bankruptcy, you would be legally required to liquidate all the assets that you hold and would have to submit them to the courts. The court would allocate a trustee who could take the process of filing bankruptcy forward and would liquidate the debtor’s assets to cash that could be paid off to creditors to clear their receivables. However, there would be some assets that could be exempt from the bankruptcy proceedings in the case of both the federal as well as the state laws, as the case may be.
Unlike the Chapter 7 bankruptcy, Chapter 13 bankruptcy is not subject to exemptions when it comes to assets. In this case, the debtor tends to strike a deal with the creditors wherein provisions would be make to pay the debts off over a period of many years. Since this option to file personal bankruptcy spreads over a period of many years together, typically, debtors may not want the procedure to extend in a seemingly endless fashion and would go for reclaiming their debts in amounts that are less than the entire amount due. This way to file personal bankruptcy requires both the parties to adhere strictly to the rules and procedures as laid out by the court of law, which would get both the parties to financial safety amicably.
The important point to note here is that of the need to stay off all actions, once bankruptcy filing has come into effect and the procedure has been set in motion. It is required legally that both the parties freeze all transactions among themselves, whether it involved following up on old communication sent across towards recovery of funds by the creditors or any responses by the debtors to the earlier actions of creditors – they would have to stop till the pending issues are cleared and the court issues a certificate of discharge of all debts pending. While the entire process is aimed at arriving at an amicable resolution of the conflicting situation, it is essential that you furnish all details necessary without covering up any detail deliberately, where such acts may constitute fraud.
You may rest assured that your decision to file personal bankruptcy protection wouldn’t affect your credit worthiness adversely as you would have a stay on your credit rankings for a period of 10 years. And a debtor could also apply for a debit card or any other cash card, while still having filed for bankruptcy. And the rules to file personal bankruptcy have also changed to make debtors file under Chapter 13 than Chapter 7 – Chapter 13 would get all the debts paid off within a normal range of 3 to 5 years. And the amount that needs to be paid depends on the IRS estimation of living costs in your locality, city or state.
All said, you can be sure that your decision to file personal bankruptcy is not a simple and straight forward affair that you can deal with casually. You would be well advised to approach a professional bankruptcy attorney who can sort issues out for you in the most amicable way.
