Filing for bankruptcy has been a historical option for U.S. citizens who have accumulated large amounts of debt to settle their debt if they don’t have the income or savings to do so on their own. In fact, 4 U.S. Presidents have filed for bankruptcy: Jefferson, Grant, McKinley and Lincoln. A number of celebrities, including Mike Tyson, Elton John, Willie Nelson, Larry King and Anna Nicole smith have also filed for bankruptcy in the past. In the United States, between quarter 1 and quarter 2 of the year 2012, there were approximately 12,126 bankruptcy filings.
Between 2012 and 2013, the number of bankruptcies in the United States went down by 13 percent. However, as American begins to recover from the recent recession, there are still many people experiencing immense financial difficulties, forcing them to file for bankruptcy. There are three different chapters of bankruptcy, chapter 7, chapter 13 and chapter 11, with Chapter 7 being the most common among Americans. Filing for chapter 7 bankruptcy requires different criteria than filing for chapter 11 or chapter 13 bankruptcy, and this is something that a debtor must understand prior to filing for personal bankruptcy.
When someone chooses to file for chapter 7 bankruptcy, just about all of their debt will be discharged except for loans and back taxes. When you file chapter 7 bankruptcy, your assets are liquidated in order to pay off you accumulated debt. Each state is different in regards to what can be discharged when you file for chapter 7 bankruptcy, making a bankruptcy litigation attorney who is certified to practice bankruptcy law in your state quite valuable.
Choosing which chapter of bankruptcy to file for necessitates taking a hard look at your financial situation, which is something a bankruptcy litigation attorney can help you accomplish. Bankruptcy law attorneys can help you understand the differences between each of the various bankruptcy laws, in order to make your decision easier. In addition, federal bankruptcy rules determine the manner in which bankruptcies take place, and what requirements debtors must meet to file for a specific chapter of bankruptcy. These federal personal bankruptcy rules typically require you to pass a means test. This test will ascertain whether your income is less than the median state income for your family size. If you fail this test, you cannot file chapter 7 bankruptcy. However, it is possible that you meet the requirements under chapter 11 or 13 bankruptcy rules, and thus file for chapter 13 or chapter 11 if you do not meet the federal rules to file under chapter 7.
Both chapter 7 bankruptcy and chapter 13 bankruptcy rules mandate that the bankruptcy be included on your credit report for up to 10 years. Thus, if you file chapter 7 bankruptcy or chapter 13 bankruptcy, it can be difficult to obtain a loan or credit card during that time period. However, many people who file chapter 7 bankruptcy or chapter 13 bankruptcy do rebuild their credit eventually. For many people, the benefits of filing bankruptcy outweigh the disadvantages. Therefore, consulting a bankruptcy litigation attorney to understand if and when should you file for bankruptcy, and which bankruptcy chapter is right for you is beneficial for you, and for the future of your finances. Reference links: koehlerbankruptcy.com