08May

A Guide to Bankruptcy Law in the United States

Overview of Bankruptcy Law

Bankruptcy law is a federal law that provides individuals and businesses with a legal framework for dealing with overwhelming debt. It is designed to help people who cannot meet their financial obligations, to find relief and get a fresh start. Bankruptcy law provides different forms of debt relief, such as debt discharge, debt reorganization, and payment plans. In this article, we will explore the basics of bankruptcy law in the United States. If you want to learn more about the subject, Background check false criminal record, to supplement your reading. Uncover worthwhile perspectives and fresh angles to enhance your comprehension.

Types of Bankruptcy

There are two main types of bankruptcy that individuals and businesses can file: Chapter 7 and Chapter 13 bankruptcy.

  • Chapter 7 bankruptcy: Read this interesting document is the most common form of bankruptcy for individuals. In Chapter 7 bankruptcy, a debtor’s non-exempt assets are sold to pay creditors. The remaining debts are discharged, which means the debtor is no longer obligated to pay them back.
  • Chapter 13 bankruptcy: This form of bankruptcy is also for individuals but is used when they have a regular income and can pay back some of their debts. In Chapter 13 bankruptcy, the debtor enters into a repayment plan with their creditors to pay back some or all of their debt over a period of three to five years.

    • Filing for Bankruptcy

    To file for bankruptcy, debtors must file a petition with their local bankruptcy court. The petition should include details on the debts, assets, income, and expenses. Debtors must also complete a credit counseling course before filing for bankruptcy. This course helps people evaluate their financial situation and explore alternative ways to handle debt.

    The Automatic Stay

    Once a debtor files for bankruptcy, an automatic stay goes into effect. The automatic stay prohibits most creditors from collecting any debts from the debtor. It also stops foreclosure proceedings, lawsuits, and wage garnishments. The automatic stay is designed to provide debtors with immediate relief from creditor harassment.

    The Bankruptcy Trustee

    After filing for bankruptcy, a trustee is appointed to oversee the case. The trustee’s role is to ensure that the debtor’s assets are liquidated or that the repayment plan is being followed. The trustee has the power to sell assets, investigate the debtor’s financial affairs, and challenge any claims made by creditors.

    Exemptions

    Bankruptcy law allows debtors to keep some assets by claiming exemptions. Exemptions are legal provisions that protect certain types of property from being sold to pay back creditors. Every state has its own set of exemption laws, and debtors must choose between state and federal exemptions. Examples of exempt assets include a person’s primary residence, personal property, and retirement accounts.

    Creditors’ Meeting

    Within a few weeks of filing for bankruptcy, the debtor must attend a creditors’ meeting. The purpose of this meeting is to allow creditors to ask the debtor questions about their finances and the bankruptcy case. The trustee also attends the meeting to question the debtor about their financial affairs.

    Discharge of Debts

    If the debtor files for Chapter 7 bankruptcy, most debts are discharged at the end of the case. This means the debtor is no longer obliged to pay them back. In Chapter 13 bankruptcy, the debtor must complete the repayment plan before receiving a discharge of their remaining debts.

    Final Thoughts

    Bankruptcy law can be a complex and confusing process, but it can also provide much-needed relief to people struggling with overwhelming debt. It is important to seek the advice of an experienced bankruptcy attorney to help navigate the legal system and ensure that you receive the best outcome possible. Looking for a more comprehensive understanding of the topic? Check out this carefully selected external resource. Experian, dive deeper into the subject matter!