The Bankruptcy law in the United States has been created to ensure that individuals are not under undue burden as a result of their debts. If you are under financial stress due to your debts, you may be able to eliminate all or part of your debts so you can start over with a clean financial slate. However, before you decide to file for bankruptcy, there are several facts about bankruptcy you should be aware of.
The Laws Are Federal Laws
These are not laws that are governed on a state level. This means that the law is the same in every state in the country, and if you decide to file, you case must be presented in federal bankruptcy court. Although there are bankruptcy courts in all of the states, these are federal courts.
Businesses Can File For Chapter 11
Only business owners can file for Chapter 11. Individuals cannot file for this type of bankruptcy. When a business owner files for bankruptcy, the business is restructured. The business will not close, but a trustee will oversee the finances.
Must Bring Your Petition before a Judge
When you file for bankruptcy, you cannot simply turn in some paperwork with a clerk. You have to appear before a judge when you want to petition the court.
Some Individual Debtors May Have To File For Chapter 13
Everyone who files for bankruptcy may not qualify for Chapter 7. The means test will determine if you are eligible to file for Chapter 7 or not.
You Can Be Forced Into Involuntary Bankruptcy by Creditors
If you have a high level of debts, your creditors may petition the court to force you to file for bankruptcy. If the judge approves the petition, you may be placed on payment plan mandated by the court.
Bankruptcy Stays On Your Credit for 10 Years
This can make it difficult for you to get approved for auto loans, mortgages and other types of financing. You may even have problems getting approved for apartment rentals.
These are some of the facts about bankruptcy that you should know before you declare bankruptcy. A consultation with a bankruptcy attorney will provide you with information about bankruptcy options and other debt relief solutions.
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