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

---

Out of Credit Card Debt - Without Filing Bankruptcy

To be out of credit card debt is your dream... Read More

New Bankruptcy Law Will Not Protect You from Identity Theft

Recently passed by Congress with overwhelming support, the oddly-named Bankruptcy... Read More

Mr. Cheapies Frugal Budget Tips

So you feel like a hamster spinning your wheel? The... Read More

Eight Ways to Consolidate Debt

Next to winning the lottery, a debt consolidation loan is... Read More

Take Careful Consideration Before Filing Bankruptcy

Filing bankruptcy is not fun! It is a last resort... Read More

Worried About Debts?

Having trouble paying your bills? Getting dunning notices from creditors?... Read More

The Road to Debt Relief

Living with debt is not something someone hopes for, but... Read More

Future Secured? Oh Really?

A headline for a retirement annuities flyer declares "Future Secured!"... Read More

Benefits and Drawbacks of Bankruptcy

Outlined below are some of the benefits and drawbacks of... Read More

Turning Bad Debts into Good Debts through Investing Fundamentals

If you've ever earned enough money to put some aside,... Read More

Going Bankrupt in the World

It all starts by defaulting on an obligation: Money owed... Read More

How Do I Lower My Debt Burdens?

How do I lower my debts?There are several ways of... Read More

Debt Problems? You Can Negotiate With Your Creditors

It is always possible to negotiate with creditors ? even... Read More

Craving For Financial Freedom

Have you ever felt trapped in a Rat Race and... Read More

Currency Trading Fee Concept

Troubles with Global Economy; Do you see future problems with... Read More

Top Ten Reasons People File for Bankruptcy

1. Eliminate the legal obligation to pay many of your... Read More

Debt Management Systems

What is a debt management system, and when do you... Read More

What Does A Bankruptcy Trustee Do?

Once you file bankruptcy a court appointed bankruptcy trustee will... Read More

Free Quick and Easy Money Saving Tips ? Part 1

With the high cost of gasoline and the amount of... Read More

Debt Help and Advice for the UK

At some time or another during our lives most of... Read More

Debt Getting You Down? - Make a List!

Debt is not much fun and when faced with it,... Read More

Repair Bad Credit Yourself

In March 2005, the U.S. financial services industry succeeded in... Read More

Debt Negotiation and Debt Settlement

Debt negotiation and settlement can give you a drastic reduction... Read More

Use A Debt Checklist To Examine Where You Are

A Debt Checklist allows you to look at items and... Read More

How to Get Money When You Are Broke

(Money You Don't Have to Pay Back) 1. One way... Read More

Debt and Your Dreams

You may not realize what that credit card bill is... Read More

Debt Settlement -- Why the Critics Are Wrong

After October 17, 2005, a lot of people are going... Read More

Is It Possible to Be Sued For My Debts?

It is possible for creditors and third-party collection agencies to... Read More

Individual Voluntary Arrangements- A New Alternative to Bankruptcy

This May, the Department of Trade and Industry in the... Read More

Learn How to Get out of Debt

Debt is becoming number one problem in the United States... Read More

Bankruptcy Interest Increases as Deadline Approaches

Congress recently passed sweeping legislation that will significantly reform American... Read More

Corporate Debt Management ? Perspective on the Why

Entrepreneurs have a tough time in their formative years. They... Read More

Debt Management - Is It the Right Choice For You?

Debt Management plans offer credit counseling clients a different and... Read More