Bankruptcy

In the United States, as well as other countries, bankruptcy is not a new idea.  The concept of debt forgiveness goes as far back to Ancient civilization.  All through history we see many different cultures dealing with debt forgiveness, some very harsh, some not so much.

Before the 20th century, bankruptcy mostly favored the creditor and were much harsher on the debtor.  It was about personal failures, guilt, slavery, and yes, even in some areas of the world, death. Now, modern bankruptcy laws in the United States are focusing on helping the debtors in distress and not on punishing them.  Financial difficulty does not mean failure.  Yet, the stigma of filing a bankruptcy still lingers.

In our recent economy, hardworking, decent people have been losing their jobs; many people are unemployed or underemployed which comes with being uninsured or underinsured.  What happens when there is an illness?  Medical bills pile up and people run out of choices and start using credit cards or payday loans.  Families are forced into debt and there is no light at the end of that tunnel.

Bankruptcy allows people in dire circumstances whether its job loss, medical bills piling up, or a combination of many different factors, a feeling of hope.  It will allow families to breathe again, by removing most, if not all their debt.  Bankruptcy allows one to begin looking into the future without all the stress.  In 2015, there were 2.55 bankruptcy petitions per 1,000 persons, according to statistics. Giving families a “fresh start” and new beginnings, so how can bankruptcy be a dirty word?

What Are The Types of Bankruptcy?

In bankruptcy, consumers and businesses eliminate or repay some of all of their debts. Consumer bankruptcies can be generally divided into two types–Chapter 7: Liquidation or “fresh start” and Chapter 13: Reorganization. Merritt Law Office, P.A. provides both services.

In Chapter 7, the bankruptcy trustee may take and sell (“liquidate”) some of your property. There is property that is protected (also called “exempt”) under state law. From the bankruptcy court’s point of view, you are able to get a clean start but if the creditors aren’t fully paid, you are limited in what necessities you can keep.

Chapter 13 is the most common bankruptcy for consumers. In Chapter 13 you keep substantially all of your property, but must make monthly payments over three to five years to repay the amount of debt you can afford.

Both Chapter 7 and Chapter 13 bankruptcy have many rules–and exceptions to those rules–regarding which debts are covered, who can file, and what property you can and cannot keep. Merritt Law Office understands the rules, but more importantly, understands the exceptions.

If you are overwhelmed by debt and need a fresh financial start, you should consider bankruptcy.