What is Bankruptcy?
Bankruptcy is a process under federal law designed to help people and businesses receive protection from their creditors to whom they owe money. After a petition for bankruptcy and fee is filed in court, the court issues an automatic stay–a court order that temporarily protects the debtor from all further acts of collections until the court accepts a plan for repayment or full discharge of debts.
WHY DO PEOPLE USUALLY FILE FOR BANKRUPTCY?
There are numerous reasons and circumstances that people may choose to file bankruptcy. Some are possible to avoid. Some are not. Possible reasons some choose to file bankruptcy may be even due to a combination of several factors such as:
- High medical bills that insurance won’t cover
- Unforeseen or Unprofitable business debts
- Debts left by an ex-spouse who did not pay as agreed
- Job loss for extended period of time
- Extensive automobile or property damages that insurance will not cover
- Large credit card debt due to job loss or poor financial management
ARE THERE DIFFERENT TYPES OF BANKRUPTCY?
While there are four (4) types of bankruptcy listed below, Chapter 7 & Chapter 13 are the most common bankruptcies used by consumers. A qualified Utah attorney can help guide you through to see which type is best for your situation.
WHAT DEBTS CAN YOU DISCHARGE IN BANKRUPTCY?
There are certain debts that are readily dischargeable in bankruptcy. They include:
- Credit and charge card debts that are more than 90 days old
- Collections
- Court judgments for bills not paid
- Medical bills
- Old utility bills
- Other bills that are not secured by collateral
WHEN NOT TO FILE FOR BANKRUPTCY
It is always in the best interest of the individual to work through his or her money own problems and pay bills than to declare bankruptcy, especially if the amount is near $20,000, which is often around one year’s salary for most people.
Seeking information and options from legal counsel is always a good idea in order to find the best solution for your individual situation.
For individuals in serious financial distress, bankruptcy is a viable option. While it does not wipe a credit record clean, it does offer a new start. One should seek competent legal counsel to consider all options before making a decision.
