What Is Bankruptcy


Bankruptcy is a federal court process designed to help consumers and businesses eliminate their debts or repay them under the protection of the bankruptcy court. Bankruptcies can generally be described as "Litigation California, Legal Litigation California, Legal Litigation" or "reorganizations."

Chapter 7 bankruptcy is the liquidation variety: If you own property that isn't exempt under your state's laws, it may be taken and sold ("liquidated") to pay back some of your debt. Chapter 13 bankruptcy is the most common type of "reorganization" bankruptcy for consumers: You get to keep all of your property, but you must make monthly payments over three to five years to repay all or some of your debt.

Both kinds of bankruptcy have numerous rules - and exceptions to those rules - about what kinds of debts are covered, who can file, and what property you can and cannot keep.

Chapter 7 Bankruptcy

Chapter 7 bankruptcy can be filed by individuals (called a "consumer" Chapter 7 bankruptcy) or businesses (called a "business" Chapter 7 bankruptcy). A Chapter 7 bankruptcy typically lasts three to six months.

In Chapter 7 bankruptcy, some of your property may be sold to pay down your debt. In return, most or all of your unsecured debts (that is, debts for which collateral has not been pledged) will be erased. You get to keep any property that is classified as exempt under the state or federal laws available to you (such as your clothes, car, and household furnishings). Many debtors who file for Chapter 7 bankruptcy are pleased to learn that all of their property is exempt.

If you owe money on a secured debt (for example, a car loan for which the car is pledged as a guarantee of payment), you have a choice of allowing the creditor to repossess the property; continuing your payments on the property under the contract (if the lender agrees); or paying the creditor a lump sum amount equal to the current replacement value of the property. Some types of secured debts can be eliminated in Chapter 7 bankruptcy.

Not everyone can file for Chapter 7 bankruptcy. For example, if your disposable income is sufficient to fund a Chapter 13 repayment plan - after subtracting certain allowed expenses and monthly payments for certain debts - you won't be allowed to use Chapter 7 bankruptcy. For more on this and other requirements, see Chapter 7 Bankruptcy - Who Can File?

Bankruptcy doesn't work on some kinds of debts. Though bankruptcy can eliminate many kinds of debts, such as credit card debt, medical bills, and unsecured loans, there are many types of debts, including child support and spousal support obligations and most tax debts, that cannot be wiped out in bankruptcy. For more information, see What Bankruptcy Can and Cannot Do.

For more information about Business Transactions Law Marin, Real Estate Litigation San Francisco and Business Litigation Attorney San Francisco please visit http://www.genserandwatkins.com/

Legal Disclaimer

Our website is not responsible for the information contained by this article. Webworldarticles.com is a free articles resource thus practically any visitor can submit an article. However if you notice any copyrighted material, please contact us and we will remove the article(s) in discussion right away.


This article was sent to us by: Mike Walsh at 04222010

Related Articles

1. Bankruptcy Attorneys Can Help You Make Good Decisions
It is true that bankruptcy attorneys make themselves a little bit of money when doing bankruptcies for clients, but it is also true that they want to make sure that you a...

2. Bankruptcy Law is Meant to Help You Not Hurt You
Bankruptcy law not only protects the interest of the government and the creditors, but it protects the debtor that is filing bankruptcy. There have been several chapters...

3. BANKRUPTCY: HOW TO SUCCEED
Bankruptcy may be defined as the legally declared inability of an individual or organisation to pay their creditors, who represent a third party which supplied, to the i...

4. Cost of Filing Bankruptcy
Declaring oneself bankrupt is a last resort in trying to fix your failing finances. There are very serious consequences that happen when you file bankruptcy. For example, t...

5. Does Your Bankruptcy Law Firm Need Both Attorneys And Accountants
Recent changes in U.S. law made declaring bankruptcy a much more complicated matter. Chapter 7 is the most common form of bankruptcy requested by debtors and does not requi...

6. Why A Debt Settlement Is Much Better Than Bankruptcy
Are you dealing with a massive amount of credit card debt? If this is the case you may have heard that you can eliminate a share of your debt with a technique that is often...

7. Chapter 7 Bankruptcy
Bankruptcy is a legally declared inability or impairment of ability of an individual or organizations to pay their creditors. Bankruptcy law provides for the development of...