Personal Bankruptcy | Chapter 7 Bankruptcies
Is Bankruptcy the Right Decision? What Chapter?
Bankruptcy is a valuable right for individuals or businesses to get a fresh start when finances become too difficult and protection is needed from creditors. As an experienced bankruptcy attorney practicing in multiple states, I would be happy to evaluate your situation to advise you when your situation would be best served by use of these beneficial laws. Every case is unique and some cases benefit more than others, so if you are ever considering it, it is worthwhile to sit with an attorney who can look at your entire financial picture and render advice. It is better to seek advice as early as possible because you may depleting assets trying to pay debts that you may simply never be able to fully overcome, and those very same assets you may be depleting may be fully protected for you to keep with proper application of the Federal or State bankruptcy provisions.
Some people simply have no other alternative — They’ve spent years borrowing from every relative just to make ends meet. Having to deal with bankruptcy in their background is a better alternative than going without food and shelter, or than even using all financial resources only to end up the same amount or more in debt. Chapter 7 gets rid of all dischargeable debt. Still others are only headed in that direction and it simply makes financial sense to make use of the protections of bankruptcy laws to protect their home and a certain amount of assets before they get in a desperate situation, or before they unnecessarily give up assets they could otherwise have protected if they only had received qualified advice. Many in this situation can still qualify or be in a preferable position to file Chapter 7 — exoneration of all debt, but with Chapter 13 — (reorganization and payment of only a small percentage of debt), debtors may pay a smaller portion instead of the total owed–
Bankruptcy Reform Act basics you should know:
On April 20th, 2005 the Bankruptcy Reform Act was signed into law by President Bush. This was the biggest of several changes in the law and went into affect on October 17th, 2005. Still, the basic rights of bankruptcy have not changed, just the process to get there, and the extent to which the rights can be exercised.
The reform legislation requires more from debtors, including pre-filing consultations with an approved consumer credit counseling service in an attempt to force consumers to pay their debts outside of bankruptcy. Additionally, in order to file, a debtor needs certification from that credit counseling agency. This is a very simple procedure that can be done in a short time on the phone or internet, and for a nominal fee, so it is not a significant hurdle.
An income-based “means-test” is also now required to determine which debtors may have the ability to pay back some of their debts. Those who do not pass the means-test (typically those that have too much remaining income after their minimum living expenses are met) would be forced into a Chapter 13 (partial) bankruptcy.
In addition, more documentation from the debtor will be required, repeated filings will be discouraged, and the waiting period between Chapter 7 bankruptcy filings has been extended from 6 to 8 years, and a debtor’s final discharge will be subject to completing a course in financial management. This again, is a simple requirement that can be done online in few hours for a nominal fee. These are only a few changes that occurred on October 17th, 2005 when the law took affect, but they are the basic ones most people want to know from the start.
This firm can discuss and assess your financial situation in the initial consultation and suggest whether bankruptcy makes financial sense for you.