Bankruptcy 101


Bankruptcy still remains a mystery in the eyes of many consumers. This article will review the facts of bankruptcy as per written law.

Some of the information in this article refers to a manual called "Bankruptcy Basics" published by the Administrative Office of the United States Courts and written by Leonidas Ralph Mecham, Director.

What, When and How Does a Debtor Discharge His or Her Debts through Bankruptcy -

A discharge of an individual's debt is a release of an individual's liability from certain specified types of debt. The discharge is a permanent order to the individual's creditors that they refrain from taking legal, collection, written or verbal communication with a debtor regarding the collection of unpaid dollars. This means that once allowed a creditor is to cease all collection activities that they would normally pursue against the debtor. If a Chapter 7 bankruptcy is filed the courts typically give four months for creditors to file a complaint that object the filing. In Chapter 13 cases the courts typically discharge the debt on an average of about 4 years from the date the repayment plan has been entered by the debtor. Without any litigation regarding objections to the discharge, the debtor will automatically receive a discharge once the four month period has expired for chapter 7 filing or after the average four year payback through Chapter 13.

What Types of Debt are Discharged?

Not all debt can be discharged through a Chapter 7 bankruptcy. For example public fines and debts due to an individual's misbehavior such as drunken driving are not allowed. Certain types of tax claims are exempt. Also child support and alimony are exempt. Guaranteed educational loans or debts for certain condominium or cooperative housing fees would be disallowed. An individual may be able to reorganize some of the debts listed if filing Chapter 13.

Can a Creditor Object to a Debtor Attempting to Discharge His or Her Debts?

Yes a creditor may object to the filing of chapter 7 bankruptcy. An individual does not have an absolute right to a discharge of their debt. Creditors receive a notice shortly after the case is filed. A creditor who wishes to object has until the time specified in the motion to dispute the individuals filing. In Chapter 13 bankruptcy cases the debtor is entitled to a discharge upon completion of all payments under the plan. Creditors may object to confirmation of the repayment, but can not object to the discharge if the debtor has completed all payments under the plan.

How Often May an Individual file for Chapter 7 Bankruptcy?

Chapter 7 bankruptcy may only be filed once every 7 years. Chapter 7 bankruptcy will also be denied if a debtor has filed a Chapter 12 or 13 within six years prior to the filing of Chapter 7.

Richard is the Media Planner for Debt Reduction Services?a not for profit organization. You can check out more articles regarding debt or other financial advice at http://www.DebtReductionServices.com

More Resources

Unable to open RSS Feed $XMLfilename with error HTTP ERROR: 404, exiting

More Debt Relief Information:

Related Articles

Bouncing Back from a CCJ
Should you be unfortunate enough to face a CCJ - but subsequently succeed in having it either set aside or reversed - the court will automatically remove the entry from the Register of County Court Judgments.The court must send notification of cancellation to the Registry Trust within three days of the date of the order.
How To Get Out Of Debt
If you have found yourself in a position where you are in serious debt and cannot think of a way out of the situation, then take a few minutes to read these few tips. Some may seem obvious but do put them into practise as they will help.
Credit Repair? Its All Up to You
Log onto to a search engine such as google.com and type in the term credit repair.
Credit Card Debt & the Unfairness of the Universal Default Clause
Let's look at a real world example: A woman purchased a new $4,000 large screen TV a few months ago based on the knowledge her monthly payment was going to be $175, and based on the 9% interest rate charged by her credit card company. For five months straight she made all her payments on time, but in the fifth month she was late paying her mortgage bill, for reasons unknown.
Home Equity - Foreclosure Often Not Necessary in Current Market
While driving around your community, you may have seen signs posted on telephone poles that offer "foreclosure help." These seemingly generous offers to help financially troubled homeowners who are in danger of losing their homes to foreclosure are actually scams.
What the Mail on Sunday Said
Anyone considering Bankruptcy may have experienced fear after reading an article written in The Mail on Sunday with the headline "Bankruptcy cheats face crackdown". But, how much of what was written was in context of the reality of Bankruptcy as it is today?The article implied that since The Enterprise Act 2002 the rise in the number of people going bankrupt was due to them using the Bankruptcy route as a "Get out of jail free card".
Assess Your Financial Attitude and Eliminate Your Debt Forever
Want to know if your attitude towards your finances is helping you or damaging your future? Take this Quiz and find out..
Bankruptcy: What the New Law Means to You
On April 20 of this year, President Bush signed a bankruptcy reform law. When this law goes into effect in October of this year, it will be much more difficult for Americans to use Chapter 7 bankruptcy to get a fresh start on their financial lives.
4 Simple Ways to Solve Your Debt Burden
Getting BehindGetting behind on your debts owed can be a very frustrating and trying time for you and your family. Depending on how far behind you are, there are other repercussions, such as your credit rating, that will affect you further down the road.
Is Independence Overrated?
Happy Independence Day from The Money Motivator!If you don't celebrate "The 4th of July" like we do in the United States, today still presents you with an awesome opportunity to examine your independence.Independence means the quality or state of being dependent.
Getting Past The Idea Of Budgeting & Saving Money
I'm sure you'll agree that budgeting, saving money, and eliminating debt are very appealing ideas. If effectively tackled, these goals can secure your financial status for the future, and allow you to live a comfortable, debt-free life.
Debt: Dont Pay Your Minimum Balance
Almost all Americans carry credit card debt. Actually, over 40% of US families spend more than they earn.
Pay Off Your Student Loans and Reduce Your Debts
Financing a college education is one of the more expensive debts you may incur. Student loans can take years or even decades to pay off.
Going Bankrupt in the World
It all starts by defaulting on an obligation: Money owed to creditors or to suppliers is not paid on time, interest payments due on bank loans or on corporate bonds issued to the public are withheld. It may be a temporary problem - or a permanent one.
Can You Escape the Trap of Ever Growing Debt?
It's difficult not to be concerned when facing numbers like these:43% of U.S.
Save Money When Going Out
It seems as though whenever we go out for the night, it costs much more than we originally intended to spend. Having a 'night on the town' shouldn't cost you a whole weeks salary.
Debt is The Master of Souls
Wholeness requires separation. In order for you to experience yourself as being whole, you spend most of your live experiencing being separated, trying to get back to wholeness.
Bankruptcy Reform
There are some new bankruptcy laws going into effect before long and many think they are much needed. Of course, that depends on which side of the bankruptcy you are a part of.
Dealing with Thingitis
Debt is quickly becoming an epidemic in America. However, through the past 50 years, America has not seen such large domestic growth.
Start Small and Your Wealth Will Get Bigger
We've all heard the phrase, "You have to start somewhere." Nothing could be truer of creating wealth and prosperity in your life.