Bankruptcy Options for Individual Debtors under U.S. Federal Bankruptcy Laws
The number of debtors, who have opted for filing chapter 7 bankruptcy, has been steadily increasing over the past few years. Both individuals as well as small business owners seem to be facing tough times because of the ongoing phase of economic downturn. Nevertheless, in order to file for bankruptcy successfully, bankruptcy filers need to have proper personal or small business bankruptcy information.
Debtors could qualify for a discharge of debts by filing chapter 7 bankruptcy. Typically, chapter 7 is also known as liquidation or straight bankruptcy and it is designed to provide legal protection to such debtors that have been faced enormous financial problems. However, to qualify for chapter 7 bankruptcy, you could be required to pass the Means Test as per new bankruptcy laws, where debtors are tested for determining their eligibility for securing debt relief under chapter 7. And if you fail to pass the Means Test, you would automatically be eligible for a chapter 13 bankruptcy which involves a monthly repayment plan for repaying a portion of debts back to your creditors.
In any case, it could be important for a debtor to have chapter 7 bankruptcy information if he primarily intends to get his debts discharged through the chapter 7 process. This is because if the bankruptcy court discovers during the case that you had engaged yourself in fraudulent practices, your chapter 7 petition may be rejected. Furthermore, some other debts like back taxes, student education loans, child support payments, debts caused by death of a family member, etc. may still qualify for a discharge in a chapter 7 bankruptcy. Although debts accruing from death of other person or personal injuries suffered on account of drunken driving or drug overdose may not be eligible for a discharge.
As per the United States federal bankruptcy laws, a debtor could be discharged for several debts through chapter 7. These include personal loans, credit cards, medical bills, etc. usually, under the typical chapter 7 bankruptcy process, a bankruptcy filer loses the right to retain all non-exempt property assets. Nevertheless, there could be few debtors that may file for discharge of excessive debts with chapter 7 bankruptcy filing and at the same time consider alternative option for some debts that do not qualify for a discharge with such conditions.
Alternatively, there is the chapter 13 bankruptcy option which involves a favorable monthly repayment plan that is spread over 3 to 5 years. Apart from that farmers could consider chapter 12 bankruptcy and big business owners could file for bankruptcy under chapter 1. Besides, chapter 9 bankruptcy applies to municipalities or government bodies and chapter 15 is meant for bankruptcies involving properties in more than one country. In any case for individuals and small business owners chapter 7 bankruptcy and 13 could be the most viable options.
Processing your request, Please wait....
