Personal Bankruptcy Facts
The Facts Pertaining to Personal Bankruptcy Cases
Though most people consider filing for bankruptcy one of the scariest financial steps in coming out from under debt, over 6 in 1,000 people file per year. This average steadily increases by 7% on the following years.
Statistical research indicates the number one reason for filing for bankruptcy amounts to consumers being unable to pay for outstanding debt in the event of loss of employment, extended illnesses without health insurance, divorce proceedings or a death in the family.
Economist put out surveys indicating those with blue collar positions in life with a lead in household finances and obtaining income in the middle class range with overspending debt accounts unmatched by their income accounts. Some laws recently passed allow the creditor and lending company added protection against outstanding debt payment accounts. These laws enact provisions, which (a) Give people with legitimate financially mitigating circumstances in life a second chance at a stabilized financial situation. (b) Allows creditors to receive payment for the risk involved in offering their product or service on a line of credit.
Two chapters make up the options for filing personal bankruptcy cases. Chapter 7 bankruptcy accounts for 2/3 of all filed cases, while Chapter 13 comprises the list of other individual bankruptcy cases. Chapter 7 bankruptcy cases require the person in debt to give up the rights to certain personal assets for auction and giving all the proceeds to repaying outstanding debt accounts. Exceptions to seized personal assets sometimes include housing and pension programs. Chapter 13 bankruptcy cases require the person to appear in court and the judge mandates a court ordered repayment process, which the lender and creditor must both adhere to. Most of these cases allow the person in debt to retain a certain amount of personal assets because repayment plans extend beyond normal terms. Either bankruptcy chapter does not account for debt incurred through owed taxes, child support, certain types of student loans and alimony settlements. The person must pay back all of these debts regardless of other rulings during court procedures.
Economist show growing concern for the increase in bankruptcy cases and the effect it will have on the overall financial stability of the average household. The federal government has stepped in to reform legislation pertaining to some guidelines involved in personal bankruptcy cases. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 presented consumers with a new set of guidelines provisioning personal bankruptcy cases. The senate ratified this act and the president signed it into law on April 20th, 2005. Bankruptcy requirements tighten up with regards to calculating income, provisioning homestead exemptions, increasing attorney liability and require consumers to undergo credit counseling in the process.
Tags: chapter 13, chapter 7, personal bankruptcy advice
September 13th, 2007 at 12:57 pm
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