Personal Bankruptcy

That said, there are a few questions most commonly asked about the bankruptcy alternative – What does that new legislation mean to borrowers?  Do debtors really have to take classes now?  Are all debts affected?  Are lawyers totally necessary?  What happens to credit scores?  Isn’t there some other option?  Will employers be notified?  What happens to the speedboat?  Is there a Chapter 6?

A million questions, and, to every one of them, the same answer … depends.  (well, except there isn’t really a Chapter 6).  In the following article, we’ll at least try to narrow down the most popular sources of confusion and provide general information to nudge curious debtors toward their own specific truth.

Everything You’ve Ever Wanted To Know About Personal Bankruptcy (but hoped you’d never need to ask)

Again, as with everything involving the government, it’s not exactly easy to declare bankruptcy.  The filing procedures themselves aren’t that difficult provided borrowers have kept all tax records the past few years and properly remember to list ALL assets – and, of course, have about three hundred bucks on hand for administrative fees – but, in virtually every situation, an attorney experienced in personal bankruptcy law should be hired to guide debtors through the thicket of shifting statutes, regional peculiarities and the garbled legalese surrounding most documents involved.  Of course, in order to get the attorney, the soon to be bankrupt must figure out some way to afford legal costs that can reach four figures, and, oddly enough, firms specializing in personal bankruptcy aren’t likely to take credit.  Takes money to make money, sure enough, but, unfortunately, it also takes money to make sure moneys owed disappear.

Presuming our readers are not themselves personal bankruptcy lawyers – or, for that matter, bankruptcy court trustees – we shan’t even try to pretend that the information contained within this entry would allow average consumers to file for bankruptcy to their best advantage.  An entire industry has developed around translating the gobbledygook passing for governmental documents, and there are as many weird and archaic state exceptions as there are ridiculous county laws.

At the same point, it doesn’t do any harm for debtors curious about the availability of personal bankruptcy protection – or, for that matter, debtors locking themselves in their garage to avoid collection agencies – to try and learn a little more about the bankruptcy process before they pay by the second to consult with lawyers.  Education is never a bad thing.  We’d just like to give a brief summary of the whole process, a quick tour of personal bankruptcy, to provide some knowledgeable foundation for borrowers as they start that long winding road to debt elimination.

We’re hardly finished with the site, as should be easy to see, but plan constant additions as laws change and your authors themselves learn more about personal bankruptcies (though not, ideally, the hard way).  Check back every week for new reports, won’t you?

Personal Bankruptcy Explained In Five Minutes

Why you need bankruptcy, and why we’re talking to you about it

The origins of personal bankruptcies go back thousands of years, but, through all but a sliver of human history, personal bankruptcy “protection” generally meant slavery, debtors prisons, or particularly gruesome forms of torture.  In the last few generations, though, America instituted a bankruptcy code that, to over simplify, meant citizens who’d borrowed more than they could repay in the foreseeable future would have those debts eliminated.

Obviously, it isn’t quite that easy.  Chapter 7 is the traditional form, what most people think of as bankrupt, and Chapter 7 bankruptcies successfully filed would indeed wipe out most debts that aren’t attached to collateral (meaning vehicles, homes, and, weirdly, college degrees: student loans are no longer covered under any personal bankruptcy program), but the borrowers also face having most of their possessions of any conceivable value seized for auction to repay creditors.  More importantly, the qualifications are incredibly stringent depending upon income, and more and more people can’t even qualify.

Afterwards, should borrowers have been denied Chapter 7 protection, the court trustee hands them right over to Chapter 13 bankruptcy: which, for the most part, safeguards asset seizure but means the debtors actually have to pay back the majority of their debts.  It’s more a restructuring program similar to what debt settlement firms can accomplish but with greater and longer lasting credit repercussions and more to pay; borrowers should take a closer look at debt settlement, really.  Basically, the judge hands down a household budget (formally based upon IRS guidelines) and payment plan that spells out family finances for three to five years.  Beats foreclosure, but not what most people have in mind when they figure they could always just go bankrupt and start right over.

There’s more within the bankruptcy code – businesses, foreign businesses, farmers, even cities and counties have their own special Chapters – but it’s hard enough to summarize even the personal bankruptcies with any accuracy.  This article should just be looked at as a stepping stone toward some understanding (which, compared with your lawyer or their trustee, will always be minimal) of the basics of the program.  Hard enough to surrender fate to the whims of the government, you might as well learn about what exactly they could do.