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What is Bankruptcy?
Bankruptcy is a federal court process designed to help consumers and businesses eliminate their debts or repay them under the protection of the bankruptcy court. Bankruptcies can generally be described as "liquidation" or "reorganization."
Under liquidation bankruptcy (Chapter 7), you submit a petition to the bankruptcy court to wipe out (discharge) the debts owed. Under a reorganization bankruptcy (Chapters 11, 12, and 13), you file a plan proposing how you will repay your creditors. Some debts must be repaid in full; others you pay only a percentage of the balance due; others may be discharged and not paid at all.
For people who are overwhelmed with financial pressures, bankruptcy may appear to be an attractive alternative. Bill boards and TV ads promote bankruptcy as an easy way to get free of debt.
You should know that a bankruptcy on your record will impair your ability to obtain loans, credit cards and financing for many years. Because the consequences of bankruptcy are so far-reaching, it is important for you to gather as much information as possible before making this decision.
Filing for Chapter 13 can cost you between $1,800.00 - $3,000.00 in Filing and attorney fees. Chapter 7 goes for anything in the $750 - $1,500 range.
We have options for you that may help you never have to file for Bankruptcy!. Click here for a FREE evaluation of your case or call us now at (800) 957-5502. You may qualify for one of our outstanding programs.
Did you know?
The New Bankruptcy Law
Here are some of the major changes you should know about.
Now that the new bankruptcy law is in effect, the landscape has changed for those who are considering bankruptcy. All debtors will have to get credit counseling before they can file a bankruptcy case -- and additional counseling on budgeting and debt management before their debts can be wiped out. Some filers with higher incomes won't be allowed to use Chapter 7, but will instead have to repay at least some of their debt under Chapter 13. And, because the law imposes new requirements on lawyers, it will be tougher to find an attorney to represent you in a bankruptcy case.
Here are some of the most important changes.
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Personal Bankruptcies hit Record High*
Survey finds that about one in every 53 households filed for bankruptcy protection in 2005.
January 11, 2006: 8:20 AM EST
NEW YORK (CNNMoney.com) - The number of consumer bankruptcy filings surged to a record high in 2005 amid changes to bankruptcy law, according to a survey released Wednesday.
Filings soared 31.6 percent to 2.04 million last year, with about one in every 53 households filing for bankruptcy, according to Lundquist Consulting, an industry group that tracks bankruptcy statistics.
"The number of consumers seeking relief of their debts through bankruptcy was at an all-time high in 2005. However, since the new law went into effect on October 17, relatively few consumers have used the new bankruptcy system," said Chris Lundquist, founder of Lundquist Consulting.
A new bankruptcy law went into effect last year, making it harder for consumers to prove that they should be allowed to clear their debts in what's known as a "fresh start" -- or Chapter 7 -- bankruptcy.
Those filings, which provide consumers with the greatest relief of their debts, increased 47.2 percent in 2005, according to the survey. Chapter 13 consumer filings, which require consumers to repay a part of their debts, declined 7.9 percent.
Fewer than 2 percent of all 2005 filings were made after the new legislation was enacted as households rushed to file early and take advantage of the old bankruptcy law, the survey said.
According to the Lundquist survey, bankruptcy filings increased in all regions, with the largest number found in California, where filings rose about 36 percent to nearly 165,000.
*Additional Information & Statistics: Administrative Office of the U.S. Court
If you are seriously considering filing for bankruptcy, consult with an attorney who specializes in this area... otherwise you could risk further complicating your current situation. |