Bankruptcy Tips and Advice

Bankruptcy tips and advice brings understanding to the bankruptcy process so that you can get the help you need to manage your finances and get on with life.

Bankruptcy Tips and Advice

Regardless of what anyone says, bankruptcy is a scary thought. After all, losing all you have is not a welcoming experience and you may not have the opportunity to start all over again.

However, for some people or businesses bankruptcy is the only way out of financial turmoil. Bankruptcy tips and advice brings understanding to the bankruptcy process so that you can get the help you need to manage your finances and get on with life.

1. What is Bankruptcy?

Generally speaking, bankruptcy is the legal term used to describe the court-based process by which a person or business declare insolvency, that is their inability to pay their debts and meet their financial obligations.

Once bankruptcy has been established either by the bankruptcy or creditors, all available assets are sold and the profits are disbursed to the creditors; and once the process is completed, the bankruptcy is released from personal liability for most debts.

2. The Purpose of Bankruptcy

Congress enacted the federal bankruptcy laws to give bankruptcies a financial "fresh start" from oppressive debt. As stated by the Supreme Court in 1934...

• "It gives to the honest but unfortunate debtor a new opportunity in life and a clear field for future effort, unhampered by the pressure and discouragement of preexisting debt." Local Loan Co. v. Hunt, 292 U.S. 234, 244 (1934).

3. Type of Bankruptcy

Types of bankruptcies vary from country to country. In the U.S. there are six types of bankruptcies.

1. Chapter 7 Bankruptcy - Provision for insolvent individual to liquidate debt
2. Chapter 13 Bankruptcy - Provision for a regular annual income individual to adjust debt
3. Chapter 11 Bankruptcy - Provision for a viable commercial enterprise to reorganize debt
4. Chapter 12 Bankruptcy - Provision for a regular annual income Family Farmer or Fisherman to adjust debt
5. Chapter 9 Bankruptcy - Provision for Municipality to reorganize debt
6. Chapter 15 Bankruptcy - Provision for foreign creditors to participate in U.S. bankruptcy cases

Generally, no-one seeks to be insolvent. However, if it does happen, it is in your best interest to get good advice from professional people. The more you understand the process, the easier it is going to be on your family.

Disclaimer: This article is for information only and is not to be used as a substitute for professional advice.

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