Understanding Personal Bankruptcy Law

There are many misconceptions about filing Bankruptcy. Bankruptcy, however, is controlled by the provisions of Title 11 of the United States Code. Having an attorney that understands Title 11 of the United States Code is essential to make sure that you no longer have to face the stress that you have been under because of your difficult financial situation. Frankly, the provisions of the Title 11 will free you of unmanageable debts and the stress that come along with it. Regardless of what the debt collectors say, filing for Bankruptcy is your legal right.

Bankruptcy was created by our forefathers with the express intent of giving people a chance at a fresh start. The United States Constitution (Article 1, Section 8, Clause 4), authorizes Congress to enact "uniform laws on the subject of bankruptcies throughout the United States." Bankruptcy allows you to have a "fresh start."

What Bankruptcy Does:

• Stops foreclosures. A Chapter 13 bankruptcy will allow you to cure your delinquent payments over a period of time thereby allowing you to keep your home. A Chapter 7 will allow you to temporarily stop a foreclosure long enough to move out and then discharge the debt on the home. Bankruptcy does not eliminate mortgages unless you decide to surrender your home.
• Prevent repossession of a car or other property and allow you the opportunity to catch up on missed payments. You may even be able to "cram down" the amount that you are required to pay to the creditor for your secured property. Section 506 of the United States Bankruptcy Code allows you in some instances to only pay the fair market value of secured property. The balance that is owed to the creditor becomes an unsecured debt.
• Stop garnishments on your pay check.
• Restore or prevent termination of utility service. You may be required to put a deposit with your utility company, but they cannot discontinue service as a result of payments in arrears.
• Eliminate most or all of your debt through a “discharge” of your debts. The discharge allows you to enjoy your "fresh start."
• Stops debt collection. Once bankruptcy is filed, creditors must stop all collection activities.
• Discharges unsecured debt including medical bills and credit card debt!

Bankruptcy does not:

• Discharge criminal fines
• Discharge some taxes. (Generally, taxes that are more than 3 years old are dischargeable.)
• Bankruptcy generally cannot protect cosigners.
• Bankruptcy cannot discharge debts that arise after the bankruptcy was filed.
• Bankruptcy may not discharge debts which you incurred through false pretenses or fraud.
• Bankruptcy does not discharge debts to ex-spouses.
•Bankruptcy does not discharge alimony or child support.

Conclusion

The decision to use the protection of the bankruptcy court is a difficult personal decision to make. It may, however, be the best course of action for you given your current financial condition. Unfortunately, we often erroneously associate bankruptcy with failure. In fact the opposite is true. Bankruptcy allows you to finally take control of your debts and lawfully deal with your creditors.

Remember: as Sri Chinmoy stated in The Dance of Life:
Failure is not falling down.
Failure is desiring to live where I have fallen.