Bankruptcy. It has become a common buzzword these past few years as the citizens of a nation once so powerful tried to come to terms with the harsh financial realities of an ailing economy. As companies downsized or closed, people found a substantial portion of their incomes lost or their means of livelihood entirely gone. For many, the only way to cope is to file for bankruptcy.
Yet there are also others who find themselves in a financial mess either through ignorance or improper money management. Whether it’s allowing bills to accumulate that they become too difficult to pay or carelessly swiping everything that credit cards are maxed out that they also become even more difficult to pay, the economy is not always to blame when individuals file for bankruptcy.
But whatever the reason for contemplating bankruptcy, this is a decision that must not be taken lightly. If you now find yourself in this situation, you need to know what you are getting yourself into since a bankruptcy petition will have long-term repercussions on your credit and financial health. Educating yourself about what to expect about the whole process is essential as this is probably already a very tumultuous time for you. In spite of all the emotional upheavals that you are most likely experiencing at this period in your life, you have to be able to think rationally so you can plan accordingly. You will be able to make more effective decisions regarding your bankruptcy petition if you educate yourself about the subject.
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Bankruptcy is a legal proceeding that allows individuals and businesses to eliminate or pay off some or all of their debts. It is governed by the provisions of the Bankruptcy Code (Title 11 of the United States Code). The process takes place in a federal bankruptcy court. The main actors involved in a bankruptcy procedure are the creditor or creditors, the debtor, the bankruptcy trustee, and the judge. Although you can go through the process on your own, it is generally-recommended that you seek the help of a bankruptcy lawyer because of the legal ramifications and intricacies of such a complicated and life-changing proceeding.
There are six types of bankruptcies under the Bankruptcy Code but for regular consumers, it is usually Chapter 7 and Chapter 13 that applies. They will be discussed in greater detail in the sections that follow. But before that, let’s look at the reasons that would ultimately drive you to take the bankruptcy route.
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