General Bankruptcy Information
(Disclaimer: The information contained in this FAQ is provided for general information purposes only and is not intended to be a legal opinion, legal advice or a complete discussion of the issues related to the area of consumer bankruptcy. Every individual's factual situation is different and you should seek independent legal advice from an attorney familiar with the laws of your state or locality regarding specific information.)
Bankruptcy is a legal proceeding in which a person who cannot pay his or her bills can get a fresh financial start. The idea of a fresh start for debtors goes back to the Old Testament and current bankruptcy laws can be traced to England in 1542 under King Henry VIII. The right to file for bankruptcy is provided for by The United States Constitution , and all bankruptcy cases are handled in the federal courts. Filing bankruptcy immediately stops all of your creditors from seeking to collect debts from you, at least until your debts are sorted out according to the law. It is an important alternative for persons strapped with more debt and stress than they can handle.
Federal bankruptcy laws were enacted to provide good, honest, hard-working debtors with a fresh start and to establish a ranking and equity among all the creditors clamoring for the debtor's limited resources. Bankruptcy helps people avoid the kind of permanent discouragement that can prevent them from ever re-establishing themselves as hard-working members of society.
To the extent that there may be money or property available for distribution to creditors, creditors are ranked to make sure that money or property is fairly distributed according to established rules as to which creditors get what. This discussion is intended only as a brief overview of the types of bankruptcy filings and of what a bankruptcy filing can and cannot do. No one should base their decision as to whether or not to file bankruptcy solely on this information. Bankruptcy law is complex, and there are many considerations that must be taken into account in making the determination whether or not to file. Anyone considering bankruptcy is encouraged to make no decision about bankruptcy without seeking the advice and assistance of an experienced attorney who practices nothing but bankruptcy law.
What Bankruptcy Can and Cannot Do
Bankruptcy may make it possible for financially distressed individuals to:
1. Discharge liability for most or all of their debts and get a fresh start. When the debt is discharged, the debtor has no further legal obligation to pay the debt.
2. Stop foreclosure actions on their home and allow them an opportunity to catch up on missed payments.
3. Prevent repossession of a car or other property, or force the creditor to return property even after it has been repossessed.
4. Stop wage garnishment and other debt collection harassment, and give the individual some breathing room.
5. Restore or prevent termination of certain types of utility service.
6. Lower the monthly payments and interest rates on debts.
7. Allow debtors an opportunity to challenge the claims of certain creditors who have committed fraud or who are otherwise seeking to collect more than they are legally entitled to.
Bankruptcy, however, cannot cure every financial problem. It is usually not possible to:
1. Eliminate certain rights of secured creditors. Although a debtor can force secured creditors to take payments over time in the bankruptcy process, a debtor generally cannot keep the collateral unless the debtor continues to pay the debt.
2. Discharge types of debts singled out by the federal bankruptcy statutes for special treatment, such as child support, alimony, student loans, certain court ordered payments, criminal fines, and some taxes.
3. Protect all cosigners on their debts. If relative or friend co-signed a loan which the debtor discharged in bankruptcy, the cosigner may still be obligated to repay whatever part of the loan not paid during the pendency of the bankruptcy case.
4. Discharge debts that are incurred after bankruptcy has been filed.
The Law Office of Douglas L. Barrett, LLC is designated as a Federal Debt Relief Agency by an Act of Congress and the President of the United States. We are proud to assist good people in bad situations file for protection under the U.S. Bankruptcy Code.
Bankruptcy is a legal proceeding in which a person who cannot pay his or her bills can get a fresh financial start. The idea of a fresh start for debtors goes back to the Old Testament and current bankruptcy laws can be traced to England in 1542 under King Henry VIII. The right to file for bankruptcy is provided for by The United States Constitution , and all bankruptcy cases are handled in the federal courts. Filing bankruptcy immediately stops all of your creditors from seeking to collect debts from you, at least until your debts are sorted out according to the law. It is an important alternative for persons strapped with more debt and stress than they can handle.
Federal bankruptcy laws were enacted to provide good, honest, hard-working debtors with a fresh start and to establish a ranking and equity among all the creditors clamoring for the debtor's limited resources. Bankruptcy helps people avoid the kind of permanent discouragement that can prevent them from ever re-establishing themselves as hard-working members of society.
To the extent that there may be money or property available for distribution to creditors, creditors are ranked to make sure that money or property is fairly distributed according to established rules as to which creditors get what. This discussion is intended only as a brief overview of the types of bankruptcy filings and of what a bankruptcy filing can and cannot do. No one should base their decision as to whether or not to file bankruptcy solely on this information. Bankruptcy law is complex, and there are many considerations that must be taken into account in making the determination whether or not to file. Anyone considering bankruptcy is encouraged to make no decision about bankruptcy without seeking the advice and assistance of an experienced attorney who practices nothing but bankruptcy law.
What Bankruptcy Can and Cannot Do
Bankruptcy may make it possible for financially distressed individuals to:
1. Discharge liability for most or all of their debts and get a fresh start. When the debt is discharged, the debtor has no further legal obligation to pay the debt.
2. Stop foreclosure actions on their home and allow them an opportunity to catch up on missed payments.
3. Prevent repossession of a car or other property, or force the creditor to return property even after it has been repossessed.
4. Stop wage garnishment and other debt collection harassment, and give the individual some breathing room.
5. Restore or prevent termination of certain types of utility service.
6. Lower the monthly payments and interest rates on debts.
7. Allow debtors an opportunity to challenge the claims of certain creditors who have committed fraud or who are otherwise seeking to collect more than they are legally entitled to.
Bankruptcy, however, cannot cure every financial problem. It is usually not possible to:
1. Eliminate certain rights of secured creditors. Although a debtor can force secured creditors to take payments over time in the bankruptcy process, a debtor generally cannot keep the collateral unless the debtor continues to pay the debt.
2. Discharge types of debts singled out by the federal bankruptcy statutes for special treatment, such as child support, alimony, student loans, certain court ordered payments, criminal fines, and some taxes.
3. Protect all cosigners on their debts. If relative or friend co-signed a loan which the debtor discharged in bankruptcy, the cosigner may still be obligated to repay whatever part of the loan not paid during the pendency of the bankruptcy case.
4. Discharge debts that are incurred after bankruptcy has been filed.
The Law Office of Douglas L. Barrett, LLC is designated as a Federal Debt Relief Agency by an Act of Congress and the President of the United States. We are proud to assist good people in bad situations file for protection under the U.S. Bankruptcy Code.
Our Top Five Consumer Bankruptcy Tips:
1. Bankruptcy relief is still available.
You may have heard about a new law passed by Congress that went into effect in October 2005. While it is true that the new law makes the process more complicated, the basic right to file bankruptcy and most of the benefits derived from it remain unchanged for most consumers. The cost of filing for bankruptcy also has increased, both in terms of fees you to have to pay the court and the fee you will have to pay your attorney.
2. Consult with a knowledgeable bankruptcy lawyer before filing for bankruptcy.
The decision to file for bankruptcy requires careful analysis and consideration of a number of factors. You should file for bankruptcy only after determining that it is the best way to deal with your financial problems. Because of a number of potential pitfalls in the new law, or what one consumer advocate called "gotchas", it is absolutely essential that consumers consult with a knowledgeable bankruptcy attorney before starting the process. For example, if your case is dismissed for not filing a required document, you may not be able to get the full benefit of a bankruptcy unless you wait a year to file again.
3. Do not procrastinate if you are facing legal action.
One provision of the new law requires that consumers receive credit counseling from an approved agency before filing for bankruptcy. If you are facing a mortgage foreclosure, car repossession, wage attachment or other imminent loss of property, you should contact a knowledgeable bankruptcy attorney immediately. He or she can help you obtain approved credit counseling so that you do so in sufficient time for the bankruptcy to be filed to stop the foreclosure sale or repossession. In order to complete the bankruptcy process, consumers also need to complete a debt education course. Again, this must be done through an approved provider and a bankruptcy attorney can point you in the right direction.
4. Avoiding "Credit Repair" and "Credit Counseling" Scams
With over a million Americans filing for bankruptcy each year and with household debt at record highs, consumers are reaching out to "credit counselors" and "credit repair" companies with increasing frequency. Although there has been a recent surge in the number of these organizations readily available to offer help to consumers, there has also been a rampant increase in the number of unscrupulous operators ready to take advantage of unsuspecting debtors. A lawyer experienced in consumer credit or bankruptcy law can help protect debtors from these unscrupulous practices and advise them on the most prudent course of action.
5. Bankruptcy and its effect on your credit.
By federal law, a bankruptcy can remain part of a debtor's credit history for 10 years. Whether or not the debtor will be granted credit in the future is unpredictable, and probably depends more on what good things the debtor does in the nature of keeping a job, saving money, making timely payments on secured debts, etc., than the fact that the debtor filed bankruptcy. In some cases it may actually be easier to obtain future credit after bankruptcy, because new creditors may feel that since the old obligations have been discharged, they will be first in line. They also recognize that the debtor cannot again file bankruptcy for at least the next four years in the case of chapter 13 or eight years in the case of chapter 7. The truth is that if a debtor cannot pay his or her bills, and the debtor's credit is already ruined or exhausted, filing bankruptcy can actually be an important first step in re-building credit.
You may have heard about a new law passed by Congress that went into effect in October 2005. While it is true that the new law makes the process more complicated, the basic right to file bankruptcy and most of the benefits derived from it remain unchanged for most consumers. The cost of filing for bankruptcy also has increased, both in terms of fees you to have to pay the court and the fee you will have to pay your attorney.
2. Consult with a knowledgeable bankruptcy lawyer before filing for bankruptcy.
The decision to file for bankruptcy requires careful analysis and consideration of a number of factors. You should file for bankruptcy only after determining that it is the best way to deal with your financial problems. Because of a number of potential pitfalls in the new law, or what one consumer advocate called "gotchas", it is absolutely essential that consumers consult with a knowledgeable bankruptcy attorney before starting the process. For example, if your case is dismissed for not filing a required document, you may not be able to get the full benefit of a bankruptcy unless you wait a year to file again.
3. Do not procrastinate if you are facing legal action.
One provision of the new law requires that consumers receive credit counseling from an approved agency before filing for bankruptcy. If you are facing a mortgage foreclosure, car repossession, wage attachment or other imminent loss of property, you should contact a knowledgeable bankruptcy attorney immediately. He or she can help you obtain approved credit counseling so that you do so in sufficient time for the bankruptcy to be filed to stop the foreclosure sale or repossession. In order to complete the bankruptcy process, consumers also need to complete a debt education course. Again, this must be done through an approved provider and a bankruptcy attorney can point you in the right direction.
4. Avoiding "Credit Repair" and "Credit Counseling" Scams
With over a million Americans filing for bankruptcy each year and with household debt at record highs, consumers are reaching out to "credit counselors" and "credit repair" companies with increasing frequency. Although there has been a recent surge in the number of these organizations readily available to offer help to consumers, there has also been a rampant increase in the number of unscrupulous operators ready to take advantage of unsuspecting debtors. A lawyer experienced in consumer credit or bankruptcy law can help protect debtors from these unscrupulous practices and advise them on the most prudent course of action.
5. Bankruptcy and its effect on your credit.
By federal law, a bankruptcy can remain part of a debtor's credit history for 10 years. Whether or not the debtor will be granted credit in the future is unpredictable, and probably depends more on what good things the debtor does in the nature of keeping a job, saving money, making timely payments on secured debts, etc., than the fact that the debtor filed bankruptcy. In some cases it may actually be easier to obtain future credit after bankruptcy, because new creditors may feel that since the old obligations have been discharged, they will be first in line. They also recognize that the debtor cannot again file bankruptcy for at least the next four years in the case of chapter 13 or eight years in the case of chapter 7. The truth is that if a debtor cannot pay his or her bills, and the debtor's credit is already ruined or exhausted, filing bankruptcy can actually be an important first step in re-building credit.
Call Our Bankruptcy
Hotline (801)221-9911or Toll-Free 800-461-3188
Hotline (801)221-9911or Toll-Free 800-461-3188
