Thread: Bankruptcy

Bankruptcy is a legally declared inability or impairment of ability of an individual or organizations to pay their creditors. Creditors may file a bankruptcy petition against a debtor ("involuntary bankruptcy") in an effort to recoup a portion of what they are owed. In the majority of cases, however, bankruptcy is initiated by the debtor (a "voluntary bankruptcy" that is filed by the bankrupt individual or organization).In ancient Greece, bankruptcy did not exist. If a father owed (since only locally born adult males could be citizens, it was fathers who were legal owners of property) and he could not pay, his entire family of wife, children and servants were forced into "debt slavery", until the creditor recouped losses via their physical labour. Many city-states in ancient Greece limited debt slavery to a period of five years and debt slaves had protection of life and limb, which regular slaves did not enjoy. However, servants of the debtor could be retained beyond that deadline by the creditor and were often forced to serve their new lord for a lifetime, usually under significantly harsher conditions.

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Actually, bankruptcy was originally planned as a remedy for creditors

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) introduced major changes to the way consumers filed bankruptcy. The law placed more requirements on bankruptcy filings that made it more difficult and costly for consumers to file.
Here are some of the major changes the new bankruptcy law introduced:

* Consumers must pass a means test to file Chapter 7 bankruptcy, the bankruptcy which discharges debts in full. The means test ensures the consumer is not abusing the bankruptcy privilege by attempting to avoid paying debts that he/she can afford to pay.
1.A consumer who fails the means test - is able to repay their debts - must file Chapter 13 bankruptcy, the bankruptcy in which debts are repaid over a 5 year period.


2.Anyone filing bankruptcy must receive consumer credit counseling six months before filing from an approved credit counseling agency.
According to the American Bankruptcy Institute, bankruptcy filings dropped significantly following the BAPCPA. Total bankruptcy filings in 2006 was 617,660. This was a 70% drop from 2005 total filings - 2,078,415.

The stricter requirements for Chapter 7 bankruptcy led to an increased percentage of Chapter 13 bankruptcy filings. In 2005, Chapter 13 bankruptcy filings represented about 20% of total filings. Post-BAPCA, Chapter 13 filings represented just more than 40% of the total.

How difficult will it be to file Chapter 7 under the new bankruptcy laws?

Bankruptcy in the United States is a matter placed under Federal jurisdiction by the United States Constitution (in Article 1, Section 8, Clause 4), which allows Congress to enact "uniform laws on the subject of bankruptcies throughout the United States." The Congress has enacted statute law governing bankruptcy, primarily in the form of the Bankruptcy Code, located at Title 11 of the United States Code. Federal law is amplified by state law in some places where Federal law fails to speak or expressly defers to state law.

While bankruptcy cases are always filed in United States Bankruptcy Court (an adjunct to the U.S. District Courts), bankruptcy cases, particularly with respect to the validity of claims and exemptions, are often dependent upon State law. State law therefore plays a major role in many bankruptcy cases, and it is often not possible to generalize bankruptcy law across state lines.

Generally, a debtor declares bankruptcy to obtain relief from debt, and this is accomplished either through a discharge of the debt or through a restructuring of the debt. Generally, when a debtor files a voluntary petition, his or her bankruptcy case commences.

Bankruptcy was originally planned as a remedy for creditors — not debtors[citation needed]. During the reign of King Henry VIII, bankruptcy law allowed a creditor to seize all of the assets of a trader who could not pay his debts. Additionally, on top of losing all of one's property, the unfortunate debtor also lost his freedom and was subject to imprisonment for failure to pay his debts. This left the family of the debtor in the position of having to pay the debts in order to obtain the release of the debtor. As time progressed, however, so did the rights of debtors in England. In the 1700s, for example, debtors were often released from prison and many fled to the United States to live. Many emigrated to Georgia and Texas, which became known as debtors’ colonies.citation needed Finally, by the early 1800s in England, debtors were often released from prison and their debts discharged. However, for many years, bankruptcy continued to be a remedy favoring creditors, involuntary in nature and largely penal in character. It was generally used only against traders.

Bankruptcy is a declaration by a debtor who is unable to fulfill existing debt obligations. If a debtor’s bankruptcy petition or request is approved by a bankruptcy court, an automatic stay is placed on his/her assets. If you are considering filing for bankruptcy, it is in your best interest to retain the services of a bankruptcy attorney or bankruptcy lawyer who will advise you whether to file for bankruptcy or apply for another form of debt relief.

Know all about the bankruptcy cases and option of ‘chapter 7 bankruptcy’ to empower yourself with our best debt lawyers.