Due to the declining nature of Americas economy and the increasing hardship on our population, many people, who normally wouldn’t be, are being made to claim bankruptcy. To aid these people, this article will provide a brief description of the bankruptcy fundamentals.
A simple definition of bankruptcy is when an individual is unable to pay off their debts. These debts can be either secured (by either a car or house) or unsecured (such as a credit card).
As this process is extremely complex and not very easily understood, you will be required to retain the services of an attorney. Because of the way our legal system is designed, you can not file for bankruptcy without an attorney.
While most people choose to voluntarily file for bankruptcy, that is not always the case. Your creditors, if you go over a certain threshold, can actually force you to file. While this may sound very un-American, it is done every day.
There are two types (or as they are more commonly know, chapters) of bankruptcy that you should be aware of. Chapter 13, which is become more popular, consists of a court approved repayment plan. The second, Chapter 7, is where the debtor liquidates all of his assets to repay his creditors.
It is very important to stress this again. You must use a lawyer in the bankruptcy proceedings. Even though this will cost you more money, bankruptcy law is entirely too complex to proceed alone.
Previous to the recent bankruptcy law changes, your attorney had a fairly easy time. All he had to do was fill out a few forms and collect his fees. That has all changed. He must now affirm to the court that all of the submitted paperwork is truthful.
As a result of the law change, the cost of filing for bankruptcy has increased. While a lawyer now gets paid more than before, in all actuality, the lawyer is now performing much more work while accepting a larger chunk of responsibility.
We highly recommend you contact a lawyer in the initial stages of considering filing for bankruptcy. If you follow this advice, you will make this emotional process a little easier to deal with.
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