Bankruptcy Overview

When debtors face difficult decisions, bankruptcy can be a useful option on the path to re-establishing financial stability. Bankruptcy might be a necessary option if a business or homeowner cannot pay their debts. Many people choose to file for bankruptcy when they are facing foreclosure or bank repossession. The term “bankruptcy” is commonly associated with failure or financial ruin, however bankruptcy is actually more commonly a resource in relieving debt and rerouting the debtor toward a more healthy financial path.

According to the website of the Bradford Law Offices, PLLC, filing for bankruptcy can provide the debtor with valuable benefits such as the discharging of debts. Additionally filing can stop the repossession of the debtor’s home and give them more time to catch up on missed payments. Debt collectors will cease incessant attempts to contact the debtor once they have taken action to file for bankruptcy and, in some cases, repossessed materials will be returned to the debtor.

Chapter 7 bankruptcy is one of the most commonly filed for chapters in the United States. Both individuals and businesses can file for chapter 7. In order to qualify for chapter 7 bankruptcy debtors must take a “means test” to evaluate how much financial assistance they are able to receive. In addition to taking this test, debtors must take a counseling course in order to prevent them from needing to re-file for bankruptcy in the future. The credit counseling course is also a protective measure against people trying to abuse the benefits gained through bankruptcy, (also known as bankruptcy fraud). The United States government classifies bankruptcy fraud as a federal crime. Fraudulent action on the debtors’ behalf might include the concealment of assets, false claims, withholding important documents, conflicts of interest, etc.

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