Bankruptcy Information

Bankruptcy Definition:

The term Bankruptcy is derived from an Italian Renaissance period word, "Banca Rotta", meaning "Broken Bench". In those times, if a merchant was unable to pay back his debts, his creditors would get together and destroy his trading bench.
Thus we get Bankruptcy, with a more modern explanation as follows:
A federally authorized procedure by which a debtor (an individual, corporation, or municipality) is relieved of complete liability of debts by making court-approved arrangements for elimination or partial repayments under the protection of the Bankruptcy court.

Bankruptcy Types:

According to the Title 11 of U.S. Code, Federal Bankruptcy Code is subdivided into eight chapters. Chapter 1, 3, 5, 7, 9, 11, 12 and 13.

Chapter 7 and Chapter 13 being the most popular Bankruptcy types that a debtor will file.

>> Avoid Bankruptcy - It Is In Your Best Interest

Bankruptcy Warning Signs or Key Factors & Influences

Any of the following, or a combination there of, could have a definate impact on Bankruptcy:

1. Prolonged or Unexpected Unemployment: Extended Unemployment or the sudden loss of a job is often a key influence of bankruptcy. To maintain a high standard of living, someone unemployed is often more likely to accept debt, without being fully able to pay it back. This can cause a rapid decline towards Bankruptcy.
2. Marital Problems: Either one or both spouses can suffer severe financial setbacks due to legal separations and divorce. An increase in divorce rates seems cause an increase in Bankruptcy filings..
3. More Credit Cards - Increased Usage: As more and more people get more and more credit cards, so will the amount of debt. This increase in debt also causes the number of Bankruptcy filings to rise.
4. Debt to Income Ratio: Simple mathematics - with an increase in amount of debt owed compared to the income, the likelihood of Bankruptcy filing goes up too.

Myths about Bankruptcy: Bankruptcy may seem to promise a lot on the surface, but deep down it solves the debt problems, only with a lot of damages.

Here is a listing of certain common misconceptions about Bankruptcy:

1. Get rid of all debts: Do not be fooled into thinking that bankruptcy can help you eliminate all debts. Bankruptcy experts say that repayment of certain debts such as child support, alimony, student loans and most taxes are can not be avoided.
2. You Will Get a Fresh Financial Start: Bankruptcy only temporarily relieves the pressures of debt. It doesn't offer a fresh start, Bankruptcy will remain a negative mark on your Credit Report that will impact your Credit Score for the next 10 and 20 years. Even if you are granted credit, the creditor will take advantage by charging high interest rates. Most experts will tell you to consider all your options and try to avoid filing for bankruptcy.
3. Include only selected Accounts: This is absolutely incorrect. Bankruptcy experts will stress that all debts must be listed - you cannot avoid paying off certain accounts or debts. Any Misinformation or neglect to include a particular debt can lead to additional costs and also the possible dismissal of the Bankruptcy case.
4. Ease in filing: The process of bankruptcy is not easy and can be quite complicated and very time consuming. And with the changes in the statutory laws, it may not be that easy to file for bankruptcy.
5. Debts wiped out for free: Depending on the type of Bankruptcy, your assets can be sold off or liquidated, and you can be placed into a new repayment schedule.