When and How You Should Declare Personal Bankruptcy
All those who are neck deep in debts due to various reasons can make fruitful use of the personal bankruptcy laws to forfeit the debts. The increasing medical costs, high alimony due to the increasing divorces and child support can lead to hefty debts but if you are honest enough then you can free yourself from the personal bankruptcy with the helping hands of law.
It is advisable to willingly declare personal bankruptcy, than to seek creditors’ advice who can also declare you bankrupt after the legal proceedings. Once you file the documents properly your creditors won’t harass you anymore. In case of car loans or mortgages on home, you need not worry as the court appoints a “Trustee in Bankruptcy” (TIB), who looks after the payments. Being a debtor, you will be protected from extra bankruptcy protection, as long as the bankruptcy proceedings are pending.
The two types of bankruptcy laws are Chapter 13 and Chapter 7. Under chapter 7, the debtor can sell his properties to pay credit card bills but cannot use it for car loans, child support, housing mortgages or any such debts. According to this law you can get your paybacks within 90 days of filing for the bankruptcy. But the Prevention and Consumer Protection Act of 2005 was established to prevent those who use this law in spite of having no property.
An individual can file for personal bankruptcy under Chapter 13, if he earns enough to pay back the debts. Under this law, the alimony or child support is counted as the primary debts. While applying for this law, it is mandatory to submit the current tax return statements.
Remember that once you have declared your personal bankruptcy, you will be shielded from the creditors. Being a citizen of U.S. you can definitely save your job and declare your personal bankruptcy.
But before filling for bankruptcy a person has to take the “means test” according to which if his Average Income (AI) is below the AI of the state then only he can apply for personal bankruptcy. A host of things are crucially required in case a person is applying for personal bankruptcy. This incorporates proof of income for the last six months, details of assets and liabilities, copy of automobile financing agreement and many more.
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