Bankruptcy has a very long tradition that is embedded in our history as a nation, in fact even predating our independence. It wasn’t until the 1800s, though, that the U.S. Congress passed the first federal bankruptcy law: the Bankruptcy Act of 1800. The second iteration occurred in 1841, the third in 1867, another in 1898, and then another in 1978.
The latest iteration of the bankruptcy law was enacted in 2005, which contained a more systematic and scientific means of determining who can qualify and file for bankruptcy.
Now, if you’re currently in a very tight corner due to your financial situation and are thinking about filing for bankruptcy, you should immediately seek the help of a trusted bankruptcy attorney in Salt Lake City or wherever you are currently residing in the State of Utah. Your attorney can offer you precious advice and will help you get through this financial bind.
Aside from hiring a bankruptcy attorney, you should know other things about the Bankruptcy Code to better understand its intricacies and determine the best course of action applicable to your specific case. Here are five of the essential things you must know:
There are six types of bankruptcy
These are the six types of bankruptcy and the parties to whom they are applicable:
- Chapter 7. Applicable to both businesses and individuals. Here, all non-exempt assets are duly liquidated and the proceeds of which are given to different creditors.
- Chapter 9. Reserved for reorganizations of municipalities, cities, school districts, and towns.
- Chapter 11. For corporations and partnerships. The business in question is allowed to continue operating while the payment plan agreed upon by both debtor and creditor is carried out.
- Chapter 12. Applicable only to fisherfolks, farmers, and ranchers.
- Chapter 13. For individual debtors. The repayment plan may either be fulfilled either within a three to five-year period.
- Chapter 15. Deals with bankruptcies that cross borders.
Bankruptcy filing should be your last resort
Filing for bankruptcy should only be seen as a last resort and not the first remedy to your financial problems involving debts.
You have to realize that doing so would hurt your credit score greatly and you may not be able to qualify for any loan from creditors in the future. So, make sure to consult with a bankruptcy lawyer to accurately determine whether or not a bankruptcy filing is really your best course of action given your situation.
You may or may not hire a bankruptcy lawyer
It’s not mandatory to hire a bankruptcy lawyer when filing for bankruptcy. If you’re filing for bankruptcy on your own, you should see to it that you have done your research and have fully understood the complex legal proceedings that you may encounter, particularly if you’re filing for Chapter 13 bankruptcy.
If you’re in any way unsure of everything that involves legal processes, then it’s better to just let a bankruptcy lawyer handle your case.
You may have all your debts wiped out
It’s highly possible, under the most favourable circumstances, to have all of your debts wiped out. However, it is not a guarantee, since your creditor could challenge your claim or the court could release an unfavorable ruling.
You may obtain a stay for repossessions and foreclosures, but you may not totally prevent them. This is especially true if your creditor can prove to the court that you don’t have the means to make good on your repayment plan.