Every person can begin acquiring loans and credit cards at the age of 18, thus making it very simple to find yourself in debt if you haven't got any financial discipline. The simple act of repaying debts becomes enormous and very complicated. Filing for one of the bankruptcy chapter as a last resort is the only option left to them. Bankruptcy is not as simple as deciding not to pay a debt. It is a legal process proceeded over by the United States Department of Justice.
There is a distinguishing difference in bankruptcy chapter 7, 11, and 13. Every bankruptcy chapter is under the regulation of The United States Bankruptcy Courts and is governed by federal laws determining the rules and guidelines for each bankruptcy chapter. Bankruptcy laws have also changed within recent years so it is especially important to know which changes in law are the most applicable to the given situation. Within its legal proceedings, regardless the chapter filed, a bankruptcy trustee is appointed for the case.
It is important, when dealing with a bankruptcy trustee, to maintain complete honesty. Issuing a false statement in court or to a court appointed representative is perjury and can result in stiff fines and imprisonment. With the advent of wide spread technology and information systems, knowledge are quickly passed from party to party.
Chapter 7 bankruptcy is where the individual person is unable to pay anything to his creditors. A list of all debts owed will be compiled by the judge and lawyer and the individual will be audited whether or not he will be able to pay back the money that is owed. If the person is not able to repay the debts then the assets not covered under exemption will be sold or returned and any extra monies paid to the creditors.
Chapter 11 bankruptcy and chapter 13 bankruptcy are where the debtor and his lawyer makes arrangements through the court system to pay back the debts in monthly installments that will not overburden the individual. Some assets, like 401k or retirement saving plans, cannot be touched by the creditors.
The need to declare corporate or personal bankruptcy may have never been your end goal. A trip to bankruptcy court can definitely not solve all of your problems but it can help you get a fresh start if you are overwhelmed by debt. The bankruptcy trustee appointed to your case will review your information and financial records before making a decision. Abide by the decision and you will be on your way to a different life where your debt is gone and you can start again.
Alan Lester van der Reinje is a former broker and runs the Investment Blog InvestorToday.net. He has more valuable advice about Chapter 7 Bankruptcy on a dedicated information site.
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