Personal Bankruptcy

Bankruptcy is one of most sensitive decision that one takes in order to payoff the huge amount of debt. When an organization decides to declare their business as bankrupt, then they have their team of lawyers who provide legal advise for the best possible deal that will be less harmful for the organization. However, in case of a personal bankruptcy, an individual has to be very careful before deciding to file bankruptcy. Personal bankruptcy can be due to several unexpected circumstances like sudden medical expenses with no insurance covered, loss of job, miss management with high expenditure etc. Whatever the reason but what one needs to decide while filing for bankruptcy is the amount he/she wants to surrender for the repayment of debt.

Every individual doesn’t want loss his property but if such circumstances came then he/she has to be very careful as the decision of bankruptcy can have an adverse impact on credit score. So, first make an assessment of the total due debt and the net value of the bankrupt property. If the debt burden is more than the property you have then its advisable to file for bankruptcy. Personal bankruptcy gives individual a chance to start his life in a new way by paying off most of his debts by selling the nonexempt property.

Application Process :

While filing for personal bankruptcy, it’s essential to have all the basic knowledge in advance related to bankruptcy. Hence, it’s advisable to take the help of an experienced bankruptcy lawyer who can give the best advice to tackle this complicated situation. It is the duty of the client to provide all information to the lawyer. As the client’s future is in stake the lawyer should have knowledge regarding changing laws on current circumstances regarding bankruptcy.

There are several things that one has to consider in the process of filing bankruptcy.

• Make list of all creditors.
• Prepare a list of all payments and personal loans that you have to pay.
• Compare the net debt amount and the value of your property.
• Consider the amount of property you can keep for your basic requirements and the property you are willing to surrender.

In the process of personal bankruptcy individuals are granted to keep certain kind of assets. These can vary from place to place but some of the most common are given below.

• Basic needs like clothing, home appliances, furniture, jewelry and motor vehicle to a certain value.
• Life insurance, pension, a small part of wages and public benefits deposited in a bank.

There are certain types of property that one needs to surrender known as nonexempt property. These include available cash, bank accounts, any kind of investment, extra vehicle or home and other valuable items that are not in necessary use. After filing for bankruptcy, the bankruptcy court appoints an attorney to take care all the financial proceedings from accessing, selling to distributing. The attorney acts as the trustee of the bankruptcy and provides protection against further harassments from creditors.

Types of Personal Bankruptcy Laws:

There are two kinds of personal bankruptcy laws: the Liquidation or Straight Bankruptcy and the Wage Earner Bankruptcy.

Liquidation or Straight Bankruptcy – It is also known as Chapter-7 Law under the Federal Government of USA. Under this law, a certain property of the debtor is sold to repay the debts like credit card bills and other. But the sold amount can’t be used in paying off the student loan, income tax debt, child support, and car or house loan. In this case the debt can be repaid within 3 months.

Wage Earner Bankruptcy – As the name suggests it is applicable to those who are getting payment as an employee. For filing on this type of bankruptcy debtor has to submit his/her tax return file. So if you have the resource to repay the debt then can file for this bankruptcy law. Then you have to pay a certain amount every month to the trustee appointed by the court who later distributed it among creditors. Here first priority is given for the payment of child support and alimony. The payment term according to the law varies from 3 to 5 years. Under the Federal Government of USA this law is known as Chapter-13 personal bankruptcy law.