Personal bankruptcy is another term for consumer bankruptcy.
Personal bankruptcy results from financial mismanagement,
poor investments, job loss, divorce and situation out of your
control. Personal bankruptcy is often seen as a measure that
will limit your personal and professional life, but this is
not true. While personal bankruptcy is a serious matter that
contains long-term effects, it is also a voluntary acceptance
and declaration of your debts. Personal bankruptcy is a step
towards healing your financial problems.
Personal bankruptcy is covered under two parts of the U.S.
Bankruptcy Code: Chapter 7 and Chapter 13. Chapter 7 bankruptcy
is a liquidation code that gives you the ability to erase
most of your debts by forfeiting assets to creditors. Chapter
13 bankruptcy is a reorganization code that lets you pay off
debts during a three to five year time span, but doesn’t
require you to forfeit any belongings or assets to pay unsecured
debts. Chapter 13 may be used only if you have a regular income
and debts are within certain limits.
Each personal bankruptcy options give you different measures
to protect you from collection attempts, utility shut-offs,
professional discrimination and future lawsuits. Each measure
is granted upon your ability to meet obligations and guidelines
set down by a bankruptcy court. You need to meet with a bankruptcy
attorney to get a clear explanation of your rights and options.
Bankruptcy Information: How can I become Bankrupt?
There are two simple ways a person can become bankrupt: by
filing a petition to voluntarily go bankrupt or for creditors
to ask the court to make an order that a person is bankrupt.
In both these cases a bankruptcy trustee is required to administer
the bankruptcy process. People are forced to file for bankruptcy
due to unemployment, large medical expenses, seriously overextended
credit and marital problems. Generally people file chapter
7 bankruptcy if they have a large amount of unsecured debt,
such as credit card debt or medical expenses, that they are
no longer in a position to pay. Unemployment, unexpected medical
expenses or divorce often prompts the debtor to seek protection
from creditors by filing chapter 7 bankruptcy.
After going through the bankruptcy information you will find
that there is no explanation to whether filing bankruptcy
will affect your credit or not. Unfortunately, if you are
behind on your bills, your credit may already be bad. Bankruptcy
will not make things any worse. The fact is that filing bankruptcy
will be less damaging than a history of unpaid accounts. Your
bankruptcy file will appear on your credit record for ten
years, but since bankruptcy wipes out your old debts, you
are likely to be in a better position to pay your current
bills and you may be able to get new credit. The best way
to restore your credit is to obtain new credit and make the
payments on the new debt on time. The objective, of federal
bankruptcy law is to provide the honest debtor with a fresh
There are debts that bankruptcy cannot erase, such as money
owed for child support or alimony, fines, some taxes, debts
not listed on your bankruptcy petition, loans you got by knowingly
giving false information to a creditor, debts resulting from
willful and malicious harm, student loans owed to a school
or government body, except if the court decides that payment
would be an undue hardship; mortgages and other liens which
are not paid in the bankruptcy case. Bankruptcy will erase
your obligation to pay any additional money if the property
is sold by the creditor. Public utilities, such as electricity,
cannot be cut off because you have filed for bankruptcy. However,
the utility service providers can demand a deposit for future
service and you do have to pay bills, which arise after your
bankruptcy petition is filed.
for Personal Loans
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How to "Discharge"