Many people are afraid to file bankruptcy, even if it is really their best option. A bankruptcy is often referred to as a US federal bankruptcy when the federal law is in opposition to the bankruptcy laws in the relevant state. Since bankruptcy is ultimately a federal matter, federal law in these cases supersedes state law.
Bankruptcy is an option for people who are suffering under such incredible debt that it is unlikely they will be able to repay it. There are several circumstances that may cause people to file for bankruptcy, including the loss of a job, a serious physical or mental illness, and home foreclosures.
There are several types of bankruptcy. Chapter 7 bankruptcy is the most commonly filed, and allows for all debts to be eliminated. It is the most common type of bankruptcy to be filed by individuals. Chapter 13 can also be filed by individuals, but is actually a form of debt repayment plan, and allows filers to repay their debt, either in whole or in part, over the course of several years.
One of the reasons that people fear filing for bankruptcy is that they are afraid that they will have to relinquish everything they own. Unfortunately, with chapter 7 bankruptcy, the court does have the power to seize the assets of the person filing in order to pay the affected creditors.
The first step to file bankruptcy is for a debtor to collect his or her financial information and records. They must submit pay stubs, bank statements, and lists of assets. They also must not open any new accounts after they have filed. The bankruptcy court will then contact the debtor and provide them with bankruptcy information and documents.
The debtor will have to attend a hearing, which will allow his or her creditors to dispute the bankruptcy. The case will be reviewed, and the debtor will be required to attend credit counseling. Then a confirmation hearing is held, during which the judge allows the bankruptcy to go forward. Some time afterward, a discharge hearing is held to end the bankruptcy and allow the debtor to start over with their finances.
The best thing for a person to do is to find out from bankruptcy attorneys what their options are. Bankruptcy proceedings can be difficult and can be an emotional time for the person filing. It is also important that you have all of your financial records available. If you are filing for personal bankruptcy, you should contact some bankruptcy lawyers to help you through the process. It is vital to have a knowledgeable lawyer on your side so that you can protect your assets.
In order to do this, your lawyer will provide you bankruptcy resources and let you know which items are exempt from bankruptcy in your state. For instance, in Alaska, you are allowed to keep certain benefits and wages in order to start your financial life again after a bankruptcy. Some of these include workers compensation, disability benefits, life insurance, pensions, wages and weekly earnings up to a certain amount per week, and child support and alimony.
Personal property exempt in Alaska includes apartment or condo association deposits, burial plots, necessary health implements, motor vehicles, jewelry, and family heirlooms up to a certain amount, books, clothing, tuition credits, money held in escrow, personal injury recoveries, and liquid assets up to a certain amount.
In Hawaii, insurance, pensions, certain categories of personal property such as needed appliances and furnishings and clothing, burial plots, books, housing down payments, motor vehicles and jewelry up to a certain amount, and public benefits are some of the items that are exempt from bankruptcy that will allow someone to support and take care of themselves after their bankruptcy is discharged.
You can easily rebuild your credit after bankruptcy. You’ll be surprised how you credit scores after bankruptcy will produce many solicitations from lenders offering to finance homes, vehicles and credit cards.