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Filing for Bankruptcy
With many people having lost jobs in recent years due to the economic downturn and the increased interest rates on credit cards and loans, more and more Americans are filing for bankruptcy. The primary purposes of the law of bankruptcy are to give an honest debtor a "fresh start" in life by relieving the debtor of most debts, and to repay creditors in an orderly manner to the extent that the debtor has property available for payment. By allowing a debtor who is unable to pay off his debts the opportunity to resolve his or her financial obligations, bankruptcy offers relief to those who’ve gotten in over their heads. The type of bankruptcy most often used by individuals is Chapter 7 bankruptcy. Under Chapter 7, the debtor’s assets are liquidated by a court-appointed trustee, who then distributes the proceeds to creditors. Chapter 13 bankruptcies account for about a quarter of all filings. Chapter 13 is designed for an individual debtor who has a stable job and dependable income. Under Chapter 13, the debtor works with creditors to develop a plan to pay off debts, or at least a substantial portion of them, over three to five years. The plan must then be submitted to the court for approval. In all cases, it is highly advisable to consult an attorney before filing for bankruptcy, because only a competent bankruptcy attorney can navigate the intricacies of complex bankruptcy law.