Personal Bankruptcy

Personal Bankruptcy Chapter 7 and Chapter 13 are the two main chapters under which individuals can file personal bankruptcy.

Chapter 7 bankruptcy is a liquidation of assets while Chapter 13 bankruptcy is a reorganization where the debtor creates a three to five year payment plan. The primary reasons for filing personal bankruptcy are unforeseen medical expenses, excessive credit card debt, loss of employment, and divorce.

Needless to say many of these events create not only financial difficulty but also a tremendous amount of disruption and distress in and of themselves. This makes it especially important that individuals consider all available options and bankruptcy alternatives to make sure whatever action they settle upon is in their long term interest. If one determines that personal bankruptcy is the best option available then one should learn more about the federal bankruptcy law.

Bankruptcy is a important decision and the law and it application to one's particular situation can be very complicated. It is generally recommend that one consult with an attorney with experience in the personal bankruptcy field.

Bankruptcy Discharge.

One of the reasons people file bankruptcy is to get a "discharge”. A discharge is a Court order that says you do not have to pay most of your debts. Some debts cannot be discharged. For example, you cannot discharge debts for:

- most taxes
- child support
- alimony
- most student loans
- court fines and criminal restitution
- personal injury caused by drunk driving or under the influence of drugs.

The discharge only applies to debts that you owed on the date you filed bankruptcy. Also, if the judge finds that you received money or property by fraud, that debt may not be discharged. It is important to list all of your property and debts in your bankruptcy schedules. If you do not list a debt, it may not be discharged.

The Judge can also deny your discharge if you do something dishonest in conneetion with your bankruptcy case such as destroying or hiding property, fa1sifying records, or lying, or if you disobey a Court order.

You can only receive a chapter 7 discharge once every eight years. No one can make you pay a debt that has been discharged, but you can voluntarily pay any debt that you wish. You do not have to sign a reaffirmation agreement or any other document to do this. Some creditors hold a secured claim (for example the bank that holds the mortgage on our house or the loan company that has a lien on your car). You do not have to pay a secured claim if the debt is discharged, but the creditor can take the property if you don’t pay.