Written by Jane Birnbaum
Posted by Stefanie Marty
Bankruptcy is a procedure allowing debtors, both households and businesses, to eliminate some bills and repay others over time.
While bankruptcy is generally seen today as a protective measure for debtors, its ancient roots are punitive, a remedy on behalf of creditors. Early United States bankruptcy laws did not provide for a discharge of debts by debtors, only a liquidation of their assets. The roots of modern American bankruptcy are found in Congress’ Bankruptcy Act of 1898.
The Department of Justice’s United States Trustee Program oversees administration of bankruptcy law. There are five chapters of United States bankruptcy law, which apply to different situations:
Chapter 7: Used by consumers and businesses, it eliminates many debts such as credit card and medical bills not secured by collateral, in exchange for the liquidation of assets not protected by federal or state exemption laws.
Chapter 13: A debt reorganization plan chiefly used by individuals who want to keep possession of assets such as homes and cars by becoming current on delinquent loans and repaying unsecured debts according to their means.
Bankruptcy is becoming so common these days it is very important for people to be aware on how they can protect themselves in bankruptcy situations. There are many codes, and laws that can help individuals against creditors and with how scarce money is these days we have to be educated on the situation.
ReplyDeletePosted by Adam Lindheim