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Bankruptcy

Disclaimer: Again we must point out that we are not attorneys and this is not intended as legal advice! The information provided here is general in nature, and although I believe it to be accurate, it is provided only to give the reader an overview of the topic. There is a lot to bankruptcy… this eBook guide is providing some general basic information.

Because bankruptcies are so common now this is something where you can easily find a lawyer in your area who can give you a free consultation! Keep in mind they make money when you file… so do not let them pressure you. Organize and write all your questions down before hand so you can get the most out of that free consultation time. 

There are several different types of bankruptcies. They are referred to as "Chapters," because Congress set out the rules in different "chapters" of the bankruptcy code. The most common are:

• Chapter 7 wipes out most unsecured debt. Often this is without loss of property, because many types of property are exempt. Non-exempt property that has more value than the loans it secures will be sold and the proceeds paid to creditors. However, if selling non-exempt property is unlikely to provide cash for the trustee, the trustee is likely to abandon it. Remember, though, debt secured by property is not wiped out unless the property is surrendered. Also, in many instances federal liability (I.R.S and other government debt) will survive Chapter 7. 

Do I have to list all of my obligations? Yes. Anyone who says you can leave bills off of your Chapter 7 if you intend to pay them is wrong. You will be signing a statement under penalty of perjury that you have listed all of your creditors. Failure to list all of your creditors could result in a number of bad things, including the denial of your bankruptcy.

Don't run up credit cards. Some people think that because they have decided to file bankruptcy, they should get the maximum benefit. So they go out and run up a lot of charges. Guess what? There is a good chance these charges will be excluded from discharge.

The other common bankruptcy chapter that most people are familiar with is Chapter 13.

• Chapter 13 requires the debtor to pay some or all of the debt over three to five years. You basically set up a repayment plan. A regular income is necessary, because regular payments will be required. Typical uses of this chapter are to save a home when the payments are delinquent, or because the debtor has too much excess income to qualify for a Chapter 7. It can also be used to save a personally owned business; and can get rid of some debts that would survive Chapter 7.