Personal Bankruptcy Laws
Personal Bankruptcy Laws:
When a person finds himself in a situation where it becomes impossible for him to settle or pay his debts and loans, the sole option that is left for him is to file for personal bankruptcy. The circumstances that lead a person to file for personal bankruptcy are very unsettling and cause a great deal of stress and mental pressure for the person filing bankruptcy. Filing for personal bankruptcy, as a whole, creates a considerable negative impact on the credit report of the person which may last for years.
Before filing for personal bankruptcy, it is advisable that the person filing for bankruptcy should consult a lawyer who has his expertise and experience of dealing the cases of personal bankruptcy. Consulting a bankruptcy lawyer helps the person, filing for bankruptcy, a great deal, as the bankruptcy lawyer will analyze and evaluate the whole situation and circumstances of the case of his client and will try to find out all the possible alternatives which could save his client from bankruptcy. However, if the bankruptcy lawyer finds that filing for personal bankruptcy is a last resort for his client, he will initiate the process by filing a petition stating all the assets, liabilities and the list of creditors.
Types of Personal Bankruptcy Laws
- Chapter 7 Bankruptcy
Chapter 7 bankruptcy is the most commonly used type of personal bankruptcy laws. In this type of bankruptcy, the assets of the person, who has filed for bankruptcy, are liquated (turned into cash or equivalent) and the proceeds are handed over to the court in which the person has filed for bankruptcy. This whole process of liquidation of the assets of the applicant is carried out by a liquidator (a person appointed or nominated by the court) who strictly follows the directions and procedures of the court. The liquidator then liquidates the assets of the applicant and makes payments to the creditors of the applicant. However, certain assets of the person, filing for bankruptcy, are exempted from liquidation under personal bankruptcy laws.
- Chapter 13 Bankruptcy
Chapter 13 bankruptcy is rarely used by a person going for bankruptcy. In this type of bankruptcy, the person filing for bankruptcy possesses some worthy asset, more often than not, a house, that is not exempted from liquidation under personal bankruptcy laws and that he does not want to be liquidated in the process of liquidation of his assets. In such a case, the court often settles the issues between the applicant of bankruptcy and his creditors and brings them to an agreement regarding the payment of the debts over a period of several years. However, the person who wishes to file for a Chapter 13 bankruptcy must have a regular source of income to pay his debts according to the terms and conditions set by the court.
Moreover, the court, under personal bankruptcy laws, after bringing the applicant and his creditors to an agreement, strictly binds all the parties to the agreement to follow the judgment of the court and the instruction therein.
This is an Original Article written by the DefeatBankruptcy.org Staff
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