What is bankruptcy? What can I do for bankruptcy protection.

A simple explanation to a complicated issue.

Rising debt and bankruptcy go hand in hand, so the right information is the first step for bankruptcy protection.

If you are having financial troubles due to excessive amounts of debt, you may be considering the option of bankruptcy like thousands of other Americans. I would like to take this opportunity to explain in a simple, basic way a legal term that might have you a little confused.

Filling for bankruptcy is a serious decision, so please take a notebook and write down the guidelines for bankruptcy protection.

When speaking of bankruptcy, there are a number of different options, although when dealing with personal debt the majority of the time one only refers to two specific cases: Chapter 7 and Chapter 13. For purposes of brevity, I am only going to explain these two types of bankruptcy.

Chapter 7 is more or less a 100% restart. A judge will completely erase all of your debt. While this may seem positive, the process is much more complete. The judge may decide that you should sell off personal belongs in order to pay something back to your creditors. You may not have the option to retain any property, etc that may be of value. Chapter 7 could be considered an almost complete liquidation of your assets.

Chapter 13 is not quite as drastic as Chapter 7. Chapter 13 requires you to organize a court-approved payment structure to pay back your debts. The plan is organized over a 3-5 year period and requires you to pay back about 30-50% of your debt depending on the judge’s ruling. This type of Bankruptcy will allow you to retain some types of personal property.

Please keep one thing in mind, since the Bankruptcy reform laws of October 2005, it has become more difficult to file fore bankruptcy. In order to file, you must present yourself before a judge who decides if you are applicable based on your income and your current situation.

If you are seriously considering bankruptcy, please take the time to speak with a financial expert. He or she may be able to help you understand your option more completely and help you avoid making a mistake you might later regret.

Chapter 7 versus Chapter 13 Bankruptcy

This article explains the principal advantages to filing for bankruptcy.

What are the positive benefits of Bankruptcy?

While bankruptcy carries a nasty cultural stigma with it, it may be a very positive choice for a number of indebted individuals to help them lighten their financial burden. Here is a list of the possible benefits that bankruptcy can bring:

1. Allows for the “discharge” of most, if not all of your debts. This means that you are no longer legally obligated to pay the debts.
2. Prevents property from being repossessed, or it may require creditors to return property that was repossessed.
3. Stops the collection process. This means that creditors must stop attempting to collect on the debts.
4. Prevents you from having your utilities cut off, or if they are cut off, requires the utility company to restore service.
5. Stops/Prevents wage garnishment.
6. Halts the foreclosure process and gives you time to catch up on payments. This means you will not necessarily lose your house or mobile home.
7. Gives you the opportunity to dispute false claims from creditors who may be trying to collect more than what it owed to them.

Help for bankruptcy protection

While bankruptcy will allow for the discharge of a number of debts, others remain non-dischargeable according to federal regulation. Non-dischargeable debts include family support, student loans, certain types of taxes, and criminal fines. Liens, mortgages, and other secured debts will also survive bankruptcy procedures seeing as how they are secured by either some sort of collateral or by the federal government.

Additionally, it is important to remember that Chapter 7 bankruptcy does not relieve a co-signer from any responsibility that he or she might have. The creditor has the right to enforce the co-signer’s obligation. Chapter 13, on the other hand, will protect a co-signer as long as the debtor complies with his or her bankruptcy plan.

If you are seriously considering bankruptcy, please take the time to speak with a financial expert. He or she may be able to help you understand your option more completely and help you avoid making a mistake you might later regret.

This article contains a simplified list of exempt and non-exempt property as outlined by Chapter 7 bankruptcy regulations.

Chapter 7 Bankruptcy Regulations: Exempt vs. Non-Exempt Property

Chapter 7 bankruptcy requires for the liquidation of debtor’s assets in order to pay back money owed to debtors. Nevertheless, the government allows individuals to retain certain belongings which are referred to as Exempt Property, while other assets, known as Non-exempt property, are automatically placed in the hands of a court trustee to be sold off. While specific exemptions and values vary from state to state, the following is a general listing of exempt and non-exempt property for individuals filing Chapter 7 bankruptcy.

Exempt Property:

1. Home Equity, up to a certain value.
2. Motor Vehicles, up to a certain value.
3. Household Appliances.
4. Household furnishings deemed reasonably necessary.
5. Clothing deemed reasonably necessary.
6. Jewelry, up to a certain value.
7. Earned wages not yet paid, up to a certain value.
8. Tools used by the debtor as part of his profession, up to a certain value.
9. Pensions
10. Government assistance: welfare, social security, unemployment.
11. Compensation awarded due to personal injury.

Non-Exempt Property

1. Cash, stocks, bonds, bank accounts, and other investments.
2. Family heirlooms.
3. A second motor vehicle.
4. A second home.
5. Expensive musical instruments that are not necessary for the debtor’s profession.
6. Personal Collections: coins, stamps, or other valuable items
7. Belongings deemed not reasonably necessary or that exceed determined values.

What can I do for bankruptcy protection