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Understanding Bankruptcy Law
from:Like any legislation, bankruptcy law is complex which is why you should begin the process by consulting with an attorney. In a nutshell, the purpose of the law is to help individuals and businesses resolve their inability to pay their debts. Simply stated the bankruptcy court looks at all of your assets and liabilities, allows certain exemptions and then divides the net assets among the creditors. Of course, it’s never that simple because everyone’s situation is different and complications can occur at any stage.
The purpose of the bankruptcy law is to give honest people a way to get out of debt and start over again. The law does not help those who think they can simply avoid a debt they want to eliminate for whatever reason. This is an important distinction to understand. Filing bankruptcy is a serious decision with long reaching consequences on your credit, but for millions of people it is also a law that offers hope for a fresh start financially.
The bankruptcy law was revised in October 2005 largely in response to claims by creditors that it was too easy for people to claim bankruptcy just to avoid paying their bills. But if you are in serious financial trouble and cannot honestly pay your debts then the new bankruptcy law’s more stringent filing requirements will not delay your bankruptcy.
The bankruptcy law has many different sections that address both individual and business bankruptcies. The law’s intent is to distribute certain assets after statutory exemptions are excluded and then use the proceeds to pay off as much creditor debt as possible. The court determines which creditor gets what amount. All bankruptcies must go through federal district court, though each state has laws concerning the payments to creditors. This is just another example of why you need a bankruptcy attorney.
The bankruptcy law established “chapters” which merely indicates the kind of bankruptcy being filed. Chapter 7 is the one used most frequently by individuals. A court appointed trustee oversees the identification and selling of non-exempt assets and the use of the proceeds to pay debts. In reality, because assets such as a house and car may be exempted, there is often no asset liquidation required. Chapter 11 is used by large corporations that are reorganizing and need to restructure debt in order to survive. There is also a chapter 12 used by farmers and chapter 13 used by individuals asking for a court established and monitored repayment plan.
For individuals filing chapter 7 there are many different aspects to the law which can impact the final result. The law will not allow you to cancel some debts such as child support. The really good news is that you will not lose your home if your debt meets the rules for determining exempt equity. The same is true for your car. You are also allowed to retain cash accounts as long as the sum total does not exceed $10,000. The courts have recently ruled that retirement accounts like IRA’s are also exempt.
It’s easy to see that the new bankruptcy law has many complex provisions, but the goal of these statutes is to give you an honest chance to start over without a heavy debt burden. Your bankruptcy attorney will assist you throughout the entire process.
File Bankruptcy News
Houghton Mifflin Harcourt files for bankruptcy - Christian Science Monitor
 Thomson Reuters News & Insight | Houghton Mifflin Harcourt files for bankruptcy Christian Science Monitor By The Associated Press / May 21, 2012 The used fiction section of Left Bank Books in the Central West End neighborhood of St. Louis, Missouri, is shown in this 2011 file photo. Publishing giant Houghton Mifflin Harcourt has filed for bankruptcy ... Houghton Mifflin files Chapter 11 bankruptcy |
Mayfield's wife files for bankruptcy - Hickory Daily Record
Mayfield's wife files for bankruptcy Hickory Daily Record On May 11, the business filed a motion requesting the automatic stay on the property be removed, stating that can be done if the person filing for bankruptcy does not have equity in the property and the property is not necessary for reorganization. |
Circus & Eldorado, Reno Casino Operator, Files Bankruptcy - BusinessWeek
Circus & Eldorado, Reno Casino Operator, Files Bankruptcy BusinessWeek Circus & Eldorado said it has an agreement with Capital Research & Management Co., a noteholder, that should allow it to file a reorganization plan by June 1. The bankruptcy “is not the result of operational issues, but rather is driven by the need to ... |
Ally Financial's Mortgage Unit Reported To File Bankruptcy - International Business Times
 AFP | Ally Financial's Mortgage Unit Reported To File Bankruptcy International Business Times By Rick Rothacker and Paritosh Bansal (Reuters) -- Ally Financial Inc's Residential Capital unit is nearing a bankruptcy filing, sources familiar with the situation said Sunday, in a move that could help the taxpayer-owned auto lender to shed its ... US-owned Ally's mortgage unit files bankruptcy Ally Fincl: Rescap Mortgage Subsidiaries File Chapter 11 Unit of Ally, ResCap, Said to Plan Bankruptcy |
MF Global paid Corzine $8 million in year before collapse - Chicago Tribune
MF Global paid Corzine $8 million in year before collapse Chicago Tribune The filing showed his pay between November 2010 and October 28, 2011. MF Global declared bankruptcy on October 31, 2011, amid a liquidity crunch prompted by worries over the company's $6.3 billion bet on European sovereign debt. |