What is Bankruptcy?

With so many people in society today finding themselves in financial trouble more often, the rate of bankruptcy has been on the rise.

The main purpose of bankruptcy is to give honest debtors a fresh start, clearing most debts and discharging debtors from legal obligations and providing the courts with non-exempt assets to be distributed among the creditors.

Originally a bankruptcy case is started with the filing of a petition. This petition declares the debtors financial information and states his intent to declare bankruptcy.

Most individuals, who file for bankruptcy, file a chapter 7. This is a liquidation bankruptcy. This is where the debtor’s non-exempt assets are sold off and distributed on the basis or priority amongst the creditors.

Bankruptcy shouldn’t be the first step though. Many people who find themselves in trouble immediately go to bankruptcy.

First talk with your creditors and try to work something out. They would rather take payments than deal with the paperwork and money that goes into legal action that they will need to take.

Next, speak with a non-profit debt consolidator. Many
people who think they are deep in trouble are only
borderline, and with some help and creative financial
dealings, debts can be paid off without the initiating of a bankruptcy case.

When all else fails, a bankruptcy lawyer should be sought. They are experts in the steps that need to be taken from filing the paperwork to the court hearing to determine if the bankruptcy filing is legit. False filing for bankruptcy is a crime and punishable in court.