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What is Bankruptcy?
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Bankruptcy is a legal
proceeding in which people who are unable to pay
their bills can get a fresh financial start. The
right to file for bankruptcy is provided by federal
law, and all bankruptcy cases are handled in federal
court. Filing bankruptcy is a way to instantly stop
all of your creditors from trying to collect debts
from you, at least until your debts are sorted out
according to the law. Which means if you are
experiencing a lot of nasty phone calls, they will
stop.
According to Tripp Finley, Esq. of Diamond McCarthy
Law Firm, bankruptcy can make it possible for you to
eradicate the legal obligation to pay most or all of
your debts. This is called a discharge of debts. It
is designed to give you a fresh financial start.
Bankruptcy can stop foreclosure on your house or
mobile home and provide you the opportunity to catch
up on missed payments. However, bankruptcy does not
automatically eliminate mortgages and other liens on
your property without payment.
It can prevent repossession of a car or other
property, or force the creditor to return property
even after it has been repossessed.
It can also stop wage garnishment, debt collection
harassment, and similar creditor actions to collect
a debt. Restore or prevent termination of utility
service. Allow you to challenge the claims of
creditors who have committed fraud or who are
otherwise trying to collect more than you really
owe.
But bankruptcy cannot fix every financial problem.
And it may not be the right course of action for
you. In bankruptcy, it is usually not possible to
eliminate certain rights of "secured" creditors.
According to Tripp Finley, Esq. of Diamond McCarthy
Law Firm, a "secured" creditor has taken a mortgage
or other lien on property as collateral for the
loan. Common examples are car loans and home
mortgages. You can force secured creditors to take
payment over time in the bankruptcy process and
bankruptcy can eliminate your obligation to pay any
additional money if your property is taken. However,
you generally cannot keep the collateral unless you
continue to pay the debt.
Bankruptcy also cannot discharge certain types of
debts singled out by the bankruptcy law for special
treatment such as child support, alimony, some
student loans, court restitution orders, criminal
fines, and some taxes.
Protect cosigners on your debts. When a relative or
friend has cosigned a loan, and the consumer
discharges the loan in bankruptcy, the cosigner may
still have to repay all or part of the loan.
Different types of bankruptcy include:
Chapter 7-which is known as straight or liquidation
bankruptcy. It requires a debtor to give up
property, which exceeds certain limits called
exemptions, so that the property can be sold to pay
creditors.
Chapter 11-which is know as reorganization, is used
by business and a few individual debtors whose debts
are very large.
Chapter 12-is reserved for family farmers.
Chapter 13-is called debt adjustment and it requires
a debtor to file a plan to pay debts or parts of
debts from current income.
Most people filing bankruptcy will choose to file
under either chapter 7 or chapter 13. Either type of
case may be filed individually or by a married
couple filing jointly.
As with any area of the law, it is important to
carefully select an attorney who will respond to
your personal situation. The attorney should not be
too busy to meet you individually and to answer
questions as necessary.
The best way to find a trustworthy bankruptcy
attorney is to seek recommendations from family,
friends or other members of the community,
especially any attorney you know and respect. You
should carefully read retainers and other documents
the attorney asks you to sign. You should not hire
an attorney unless he or she agrees to represent you
throughout the case.
In bankruptcy, as in all areas of life, remember
that the person advertising the cheapest rate is not
necessarily the best. Many of the best bankruptcy
lawyers do not advertise at all.
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Brenda Segna is a freelance writer with over 20
years of writing experience in a variety of genres.
A partner in BLaST creative, Brenda Segna writes and
designs for optimal web page ranking.
Article Source:
http://EzineArticles.com/?expert=Brenda_Segna
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It's choice,
not chance,
that determines
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