Filing for bankruptcy is a government provision that is especially designed for people who are confronted with financial crisis due to circumstances beyond their control. By declaring bankruptcy, they are freed from the obligation to pay their creditors.
Unfortunately, there are people who take advantage of this provision. They file for bankruptcy just to get away from their debts. For this reason, the government has come up with new bankruptcy laws to ensure that those filing for bankruptcy are only people that are left with no other option but to do so. Through the Bankruptcy Abuse Prevention and Consumer Protection Act, the benefit of filing for bankruptcy is only given to those who really need it.
Furthermore, the Supreme Court sees to it that consumers who are in deep financial crisis, who may not have enough capability to shoulder their debts are given the chance to start anew with their lives.
Filing for Bankruptcy
With regards to account provisions, the U.S. Bankruptcy Code clearly protects funds such as pensions, annuities and other like payments paid to the debtor. The Supreme Court has recently made a ruling that Individual Retirement Accounts are also considered as pension funds and therefore, are protected on behalf of the debtor who declared bankruptcy.
If you need to file for bankruptcy, you have to file in the bankruptcy court of your State. By doing so, you are seeking help to be released from your debts or to come up with a repayment provision. There are six different types of bankruptcy and the most common chapters of bankruptcy filed by consumers are Chapter 7, Chapter 11, and Chapter 13. Each of these chapters has specific clauses that are specifically designed to deal with different financial issues. The whole process of bankruptcy may be a little complicated and if you have already decided on taking this step, understanding what the procedures are would be a tremendous help.
The Bankruptcy Abuse Prevention and Consumer Protection Act generally apply only to bankruptcy cases that are file on or after October 17, 2005. Cases that have been filed prior to this date follow a different set of procedures. You can learn about the complete list of procedures at the bankruptcy court’s official website at http://www.uscourts.gov/bankruptcycourts/bankruptcybasics.htmlThe Process.
Remember that this action should only be done after carefully considering your situation. Even if you are experiencing debt problems, it is important that you try to seek out all possible ways to straighten the situation without declaring bankruptcy. Do not forget that a record of bankruptcy will remain in your credit history for seven years. If you can provide another solution to your financial problems other than bankruptcy, you will be in a much better position.
Thus, before filing for bankruptcy it would be best to consult a professional and reputable attorney, public accountant or a financial consultant with regards to your personal financial issue. If you are need to seek bankruptcy because of the depth of your present financial situation, don’t forget to ask for advise about which Chapter of Bankruptcy would be most appropriate to file.