Bankruptcy Information

Bankruptcy Abuse Prevention and Consumer Protection Act

In 2005, the Bankruptcy Abuse Prevention and Consumer Protection Act was introduced, and along with it came many changes to traditional bankruptcy procedures. Bankruptcy Abuse Prevention and Consumer Protection Act

Life After Bankruptcy

After you've gone through bankruptcy, your life will change dramatically. Read about what you need to do to make the transition as smooth as possible. Help Dealing with Life After Bankruptcy

About Bankruptcy

Bankruptcy is a common occurance in the United States, so being informed on the specifics is vital. We define bankruptcy as a federal right guaranteed under Article I, Section 8, of the U.S. Constitution allowing the bankrupt to reorganize and discharge debts.

Bankruptcy is designed to accomplish two main goals:

1. To provide relief and protection to debtors who are in severe debt and cannot recover financially without help.
2. To fairly distribute the debtor's assets amongst all the creditors.

Bankruptcies are categorized into several different chapters, depending on the situation. They are categorized as straight bankruptcy, reorganization, farmers' bankruptcy, and adjustment of debts for individuals with regular incomes.

Chapter 7 Bankruptcy - Liquidations / Straight Bankruptcy

In a straight bankruptcy, the debtor lists his/her debts and turns over the assets to a trustee. The assets are then sold and the proceeds are distributed amongst the creditors. The debts are discharged or forgiven and the debtor is relieved from the obligation to pay those debts.

Chapter 11 Bankruptcy - Reorganization

Chapter 11 Bankruptcy, or a reorganization of assets, is most commonly used by corporate debtors. In reorganization, the creditors and the debtor make a plan under which the debtor repays a portion of its debts and the rest is discharged. This allows the debtor to remain in business.

Chapter 13 Bankruptcy - Adjustment of Debts of an Individual with Regular Income

If you are an individual with regular income and have unsecured debts of less than $250,000 and secured debts of less than $750,000, you may take advantage of Chapter 13 bankruptcy. Chapter 13 Bankruptcy allows people with regular income to pay off their debts free from the harassment of creditors. Under this plan, debtors avoid the stigma of being labeled bankrupt. This type of bankruptcy can only be initiated voluntarily by the debtor, and is considered the least expensive and least complicated form of bankruptcy.

Chapter 12 Bankruptcy - Adjustment of Debts of a Family Farmer with Regular Annual Income

Chapter 12 Bankruptcy applies to farmers whose gross income is at least 50 percent farm dependent and whose debts are at least 80 percent farm related. This form of bankruptcy is very similar to a Chapter 13 bankruptcy, except that it applies to farmers.