The Federal Bankruptcy Laws have undergone certain changes recently. The new Federal Bankruptcy laws have set stringent norms for debtor who plan to file for bankruptcy. Sometimes understanding these rules are a bit difficult. So any person who wants to file for bankruptcy needs to hire someone who can guide debtors intending to apply for bankruptcy. If not, the debtor may commit mistakes at any point of time and this may lead to increased difficulties in discharging debts. It
also prolongs the repayment process.
There are two types of laws that can give protection to the debtor called Chapter 7 and Chapter 13. Each one has its own eligibility criteria. If a debtor wants to file Chapter 7 bankruptcy, he has to meet certain requirements. For instance, his income has to be equal to or less than the median income of the state. After meeting the minimum financial obligations every month, if a debtor is left with nothing, he can apply for Chapter 7 bankruptcy. If he has unsecured debts like credit card bills or medical bills, filing for Chapter 7 bankruptcy is a good option. The debtor has to take a credit counseling session to find out whether Chapter 7 or Chapter 13 will be suitable for him.
If a person files for bankruptcy, as per the order of the federal court, the creditors are not allowed to make collection calls to the debtors. The court decides which debts are to be discharged and which debts are required to be paid. The new Federal Bankruptcy Laws states that most of the non-exempt assets can be sold by the court or the court appointed trustee for repaying the creditors. This explains why it is so important to select the right type of bankruptcy. Selection
should be according to the situation of the debtor.
If a debtor has lot of assets and wants to keep his home or car with him then he should go for Chapter 13 bankruptcy. In Chapter 7, a debtor has to lose his assets so Chapter 7 will not be appropriate for him. In this context, a good bankruptcy lawyer can guide as he is well acquainted with the legal norms of bankruptcy.
There are many law firms and if you seek assistance, they can guide you. Bankruptcy is a complex aspect of the legal system involving contract laws, real estate laws and tax laws. Once again, the court will decide which creditor needs to get paid and in what order. Other than these, there are 2 common types of bankruptcy. They are called Chapter 11 and Chapter 12 applicable in debt related matter pertaining to businessmen and farmers. They have their own procedures and documents need to be furnished as per requirements.
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