Bankruptcy Law - Do You Qualify to File?
The word bankruptcy is often bandied about in cases where a person or business sees no way out of a financial mess. Thanks to people abusing one bankruptcy law or another, rules have become stringent on who qualifies to file. But before getting into those qualifications, it is important to point out that many people have no concept of what bankruptcy actually is or that there is more than one type of bankruptcy law.
Bankruptcy is a legal way to negotiate debts and work out a payment plan under the supervision of a court of law. Many people are under the impression that if they go through bankruptcy that all of their debts are forgiven and they start with a clean slate. This is simply not the case.
There are two main types of bankruptcy law - A Chapter 7 and a Chapter 13. The financial situation of the debtor depends on which path is chosen. With the Chapter 13 bankruptcy law, the debt is reorganized, often with an interest-free plan approved by the courts. This means that the debts are not forgiven; rather, they are restructured over a period of time to be paid off. The Chapter 7 bankruptcy law is often referred to the liquidation law. Under this law, most of the assets held by the person or business are sold off in order to pay off as much debt as possible.
There are a number of reasons to consider bankruptcy. One of the most common is high medical bills. Due to escalating medical costs and the fact that insurance companies are paying less on claims, many people can easily become overwhelmed. In this case, bankruptcy law can be beneficial. There are other instances where bankruptcy might seem the only alternative. Losing a job can quickly put many families on the brink of financial disaster, especially if they are living paycheck to paycheck. Filing for bankruptcy can also put a halt to those relentless calls from creditors.
Interpreting bankruptcy law can be confusing for the layperson. And when you add the stress of potential loss of a home, car or other assets, it can be almost impossible to wade through the complex details. Because new bankruptcy laws have made it tougher for people to qualify for protection, the best bet for the next course of action would be to consult with an bankruptcy attorney. They are equipped to determine the best course of action and whether filing for bankruptcy is even a viable solution. Contact a compassionate and dedicated Chapter 7 or Chapter 13 bankruptcy attorney today.