What is BANKRUPTCY and how can it help me?

Every year, more than 1,000,000 Americans file for protection under federal bankruptcy laws. Although some bankruptcy claimants are deemed as credit abusers and/or considered financially irresponsible, many hardworking individuals and businesses can succumb to financial difficulty and face irreparable economic crisis.

Bankruptcy is designed as a legal option to help resolve such a crisis and act as a financial life preserver for those drowning in debt. To discuss your bankruptcy options, or other areas of recourse that might be available to you, contact a qualified bankruptcy attorney who can advise you of your legal rights as stated under bankruptcy law and federal bankruptcy courts.



Bankruptcy is a federal court process designed to help individuals 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 a liquidation bankruptcy (Chapter 7), a claimant files to eliminate debt through the bankruptcy court. Under a business reorganization (Chapter 11) or a consumer payment plan (Chapter 13) a debtor files a plan with the bankruptcy court proposing full or partial repayment to creditors.



New Bankruptcy Laws:
As of October 17, 2005, the requirements under which a debtor may file Chapter 7 bankruptcy changed with the passage of the Bankruptcy Abuse Prevention and Consumer Protection Act. Debtors are now required to seek budget and credit counseling within six months of filing, financial “testing” is required to determine the debtor’s capacity for debt repayment, Chapter 7 cannot be filed if the household income is greater than the median household income as deemed by the state, and state exemptions cannot be applied unless the debtor has resided at current residence for over two years.


Due to the imposed requirements for Chapter 7 bankruptcy as set forth by the new laws, debtors who were eligible to file under Chapter 7 will now have to file under Chapter 13 bankruptcy instead, in which individuals and creditors agree to a court-imposed plan that requires some or all debts be repaid over five years, with an appointed trustee assigned to monitor the repayment process.

Bankruptcy filings will continue to be recorded on an individual’s credit report for seven years in the case of Chapter 13, and up to ten years for Chapter 7.