Before you file for bankruptcy, you should first decide which type of bankruptcy is applicable to your situation. Bankruptcy law is divided into two general areas—business bankruptcy and consumer bankruptcy. Business bankruptcy applies to debts associated with a business. Consumer bankruptcy is reserved for consumer debts, which relate to an individual’s household expenses. While these two types of bankruptcy seem pretty simple to differentiate, other factors can cloud a filing. For example, if you run a small business and you frequently commingle business funds and expenditures with your personal funds and expenses, your creditors may be able to draw your business into a consumer bankruptcy because of the commingling.
Within each of these two types of bankruptcies are splinters of more specific filings. What type of bankruptcy you actually decide to file will depend on your remaining assets. If you can afford to pay some of your debts, you may want to use bankruptcy to restructure your debts. This means that you pay out what you can over the course of the bankruptcy. At the end of the bankruptcy, the creditor can no longer harass you for the debt. If you are in such dire circumstances that you simply cannot afford to repay anything, the bankruptcy court may be able to wipe out your debts. Even though a consumer group advertises that they are willing to help you with these issues, only a licensed attorney can tell you what the law is and how it applies to your bankruptcy question. Because you can only file for bankruptcy a limited number of times, you may lose an opportunity to resolve your debt issues without competent advice.
A bankruptcy should be pre-planned to avoid complications during the bankruptcy. Once a bankruptcy is filed, several troublesome issues are almost immediately resolved. The first is that debt collectors are put in check by an automatic stay. Once your bankruptcy is filed, they can no longer harass you for payment. They must go through the bankruptcy court to perfect their creditor rights. Failure to perfect their interest can result in a waiver of their right to collect on the debt later. If they continue to harass you for payment, they can also risk being held in contempt by the bankruptcy court.
Because many people abused the protections afforded by bankruptcy, Congress recently enacted several reforms limiting the scope of bankruptcy protections. Despite these reforms, bankruptcy is still an effective tool for consumers to resolve burdening debt issues. Bankruptcy law covers everything from when to file and how to file. Bankruptcy law tends to be a bit more administrative in nature. This means that the rules are fairly clear about what you do to file and complete your bankruptcy petition. Failure to comply with filing requirements can result in the bankruptcy court involuntarily discharging your bankruptcy case. Bankruptcy is a shot at getting your credit, and your life, back on track. Explore some of the FreeAdvice bankruptcy topics in the links on this page to learn tips and strategies for effectively eliminating your debt burden.
Bankruptcy Law contains: 118 Articles, 166 FAQs, 5 Videos
Question: If I filed a Chapter 7 and have received the discharge saying that all of my debts have been discharged, does that include my auto loan?
Details: When I filed I didn't have a lawyer handle my paperwork. I only could afford someone who prepared bankruptcies. After we got the discharge paper we had contacted the bank to … Read Entire Question and Answer
Question: Should I file joint bankruptcy with my husband even though my name is on none of his debts?
Details: He acquired all the debt before we were married. We've been married 1 1/2 years. I have no need to file but have been told that since we were married his creditors could come after me … Read Entire Question and Answer
