What happens when a business files Chapter 7 bankruptcy? Many businesses in the United States file bankruptcy each year. Business bankruptcies are similar to individual bankruptcies in that the business files a petition for protection against creditors in bankruptcy court and is issued a “stay†while the court appoints a trustee to take over the finances of the business.
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Contrary to popular belief, there is life after bankruptcy. Life after bankruptcy can mean total debt elimination and the freedom to save, invest money and use credit wisely, or yet another downward spiral into more debt. Those who are thinking of filing bankruptcy due to credit card debt, or those who have already filed, should look at the bankruptcy as a new beginning and a chance to better manage their finances.
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In many cases, bankruptcy can be avoided if the habits that lead to one filing bankruptcy are curbed early on in life. It is never too soon for individuals to learn how to avoid bankruptcy.
People in the United States tend to live on credit quite a bit. Many individuals feel pressured to keep up with neighbors, friends and family and end up overextending themselves on their credit cards. Unfortunately, credit card lenders are pretty indiscriminate as to who they issue credit. There are hundreds of thousands of credit card companies in the United States today. And once someone gets one credit card, chances are they will begin to see many offers coming through the mail for more credit.
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Filing bankruptcy is a personal, and often a very emotional decision. Thousands of people each year file different types of bankruptcy petitions to either eliminate or consolidate their debt. Although the laws for filing bankruptcy have become more stringent in recent years, many people who find themselves in a situation where they cannot possible pay their bills. Most bankruptcy cases involve people who have met financial hardship through a series of difficult circumstances and to whom bankruptcy is the last resort. Many people feel that filing bankruptcy is the ultimate sign of defeat and feel ashamed and embarrassed. In many cases, people filing bankruptcy are not solely to blame for their predicament.
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Just as certain assets are exempt from bankruptcy, so are certain debts. Certain debts that you may accumulate will still have to be paid, whether or not you file bankruptcy. These debts are considered debts exempt from bankruptcy law.
One example of debts exempt from bankruptcy is child support. If you have been ordered to pay child support payments, or maintenance, by a court order, filing bankruptcy will not alleviate these debts. Child support debts will not be reduced or eliminated, whether or not you file Chapter 7 or Chapter 13 bankruptcy. Many people try to avoid paying these obligations, but child support is considered to be one of the debts exempt from bankruptcy.
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Tags: Debt Exempt
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 received a lot of objection from bankruptcy lawyers, judges and consumer advocate groups. Many felt that this act, which became effective on October 17, 2005, would hurt consumers who got in over their head with credit card debt and not give them the option eliminating the debt and starting fresh.
The purpose of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, with regard to bankruptcy, was to eliminate people who took advantage of the bankruptcy laws for their own gain. For most people, filing bankruptcy is one of the most traumatic experiences they have to endure. Most people who file are ashamed and embarrassed at having failed to pay their debts. Most people are raised to pay off their debts in a timely manner and most Americans are very credit conscious individuals. We worry about our credit scores and borrowing power to the point of mania.
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Many people think that when someone files bankruptcy, they lose everything they own: House, car, clothes and furniture. This is not the case. Most items that people need to live are assets that are exempt from bankruptcy law. Even with the new bankruptcy laws intact, those who file bankruptcy are able to keep personal items that are exempt from creditors, with certain stipulations.
Bankruptcy filing is mandated by federal courts. For this reason, bankruptcy law is the same throughout the United States. Bankruptcy petitions are filed in Federal court in what is known as “bankruptcy court.†An individual or their attorney files a petition in bankruptcy court asking for protection from the court against creditors and, if filing Chapter 7, elimination of their debt.
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The advantages of bankruptcy give a debtor relief from insurmountable debt that is difficult or impossible to pay. Unlike days of old, there are no debtors prisons in the United States or most of the civilized world. People who do not pay their bills, however, are subject to being named in a lawsuit by their creditor. One of the advantages of bankruptcy is that once the petition has been filed, creditors are no longer able to contact you for money.
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