Welcome to BankruptcyResource.org; the free website offering information regarding all types of bankruptcy. This site is constantly being updated with in-depth articles, guides, helpful resources and other bankruptcy information for you to read and use.
Going bankrupt can be a highly stressful situation for you, your family and business partners. Gaining the knowledge to understand how bankruptcy works and the process you will have to go through is time well spent, and this website aims to be the complete resource for you to use.
What is bankruptcy?
The term bankruptcy can apply to a variety of situations. Take intellectual bankruptcy for instance, this could mean a lack of education. Then there is moral bankruptcy or absence of morality and ethics. Bankruptcy is basically the absence of something. However, what we're interested in is the financial applications of bankruptcy and its repercussions on the modern individual or enterprise.
The term bankruptcy borrows its meaning from the Italian word banca rotta or broken bank. The very first bankers would use a bench that was common in public places such as marketplaces and fairs to write their bills of exchange or count their money. Whenever a banker's business venture would fail, he was said to have 'broken his bank' and as this banking custom was popular in Italy, so the term bankruptcy came about. In these modern days, bankruptcy is the last place you would want to land your bottom dollar but although it is sad for me to say, bankruptcy is not very uncommon. You see debtors filing for a Chapter 7 or a Chapter 13 left and right. Why is this legal procedure so popular? What exactly does it involve? Many questions arise when discussing bankruptcy information and an answer to each one is perfectly in order.
Where and when did bankruptcy begin?
You can trace the roots of bankruptcy as far back as the old testament in the Bible or the Torah where the release of debt was ordained every seven years and a further system for the release of debt slaves and the debts of 'foreigners' was construed. There is also proof of bankruptcy in the Qur'an where it was promoted to give time for a debtor to be able to pay what he owed. Another example of bankruptcy was in 1542, when English legislation, called the “Stature of Bankrupts”, was put in place for those who fell into insolvency.
What is the meaning of financial bankruptcy and what exactly does it do for the debtor?
Financial bankruptcy is a legal process that is intended for the release or gradual repayment of debt of an individual, partnership or corporation that is no longer capable of servicing a debt as they become due.
Insolvency simply cannot be generalized and the United States Government currently has six Chapters under the Title 11 of the Bankruptcy Code that it uses to regulate or discharge debt.
Before I file for bankruptcy, is there anything that I should know?
If you're thinking of filing for bankruptcy as an individual, you should know that filing for insolvency doesn't work on all kinds of debts. It is true that bankruptcy does work for unsecured debts such as credit card loans and medical bills however, if you're filing bankruptcy and the root cause is the accumulation of secure debt, then you might be in trouble as these are not discharged by the bankruptcy laws. You might be released from some types of secure loans like a car or house debt but provided you surrender the asset back to the creditor. Debt in the nature of child and spouse support, student loans or particular types of taxes cannot be discharged by declaring bankruptcy. Chapter 7, entitled Liquidation and Chapter 13, entitled Adjustment of Debts of an Individual With Regular Income, are the two most common avenues by which most individual, partnership and corporate debts are discharged. Whether you're eligible for Chapter 7 bankruptcy or Chapter 13 will be decided by a means test. This test is a safeguard against abuse of Chapter 7 which is specialized for debtors who have lost all means to pay for their debt.
For those of the corporate world, filing for bankruptcy isn't as simple. If a further desire to operate is maintained, Chapter 11, entitled Reorganization is the process that regulates insolvency issues. This Chapter usually enforces concurrent repayment of debts but only by a court approved plan of reorganization.
If I still want to file for bankruptcy, how do I go about it?
Retaining counsel at this point will be a wise decision for you to make and your said counsel should be able to take care of the details of filing the case in a bankruptcy court that services your area. After you have filed, an automatic stay is enforced inhibiting your creditors from making any motions of collection of the said debts and at this point in time the court will already have selected a trustee and the said trustee will already be in the process of scrutinizing your financial dealings and assets. Further, any attempt at concealing assets or secure liabilities could possibly result in perjury so care must be taken when declaring all your eligible debt and assets.
Will this declaration of bankruptcy stay on my record? And for how long?
A record of your bankruptcy will show on your records for a number of years. For how long will be dependent on the type of bankruptcy your case was processed but generally it will not be more than 8 years. This also does affect you is a number of ways, one of these negative effects being difficulty in continuing or procuring a credit line.
Bankruptcy has an incredible number of ins and outs and entire professions have been made just on its study, but although this is true the heart of the bankruptcy rules and regulations were made to help those in need of a way out. Provided you are honest about your dealing when presenting your case for bankruptcy, a way out is what you will find indeed.
For bankruptcy help and advice on specific areas, browse through the various sections on our website. We aim to provide as much relevant and helpful information on personal and business bankruptcy and appreciate any support you can provide either by linking to us from your blog, tweeting us, or liking us on Facebook. We hope you find the answers to all of your bankruptcy questions right here at BankruptcyResource.org!