The word bankruptcy is derived from the combination of two Latin words ‘banco’ meaning ‘a table’ and ‘ruptus’ meaning ‘broken’, implying the broken state of an entrepreneur’s business. Bankruptcy can be defined as a legally declared inability or incapability of individuals or organizations to pay their creditors.
A person can file for personal bankruptcy under chapter 7 of the bankruptcy act. On acceptance of the bankruptcy request, the court mails letters to the creditors about the bankrupt state of that person and the creditors are legally bound to stop demanding repayment. Before filing for bankruptcy, an individual has to take a course that provides information about credit counseling and financial management. They also have to take a ‘means test’ in which their average income is calculated and if it is below the average income of that state, only then can they apply for personal bankruptcy.
The ‘Means’ test mentioned above shows how much a debtor can afford to pay towards credit cards and the sum can be calculated by subtracting the living expense from the income of the concerned person. Debtors filing Chapter 7 or Chapter 13 bankruptcy, must present to the trustee, at least seven days before the 341 meeting, a copy of a tax return or transcription of a tax return, for the period for which the return was most recently due.
Other documentation that is required at the time of filing bankruptcy includes a list of creditors, details of assets and liabilities, a certificate of credit counseling, proof of income for the last six months, statement of monthly income, tax returns for the previous four years and tax returns during the bankruptcy case. The individuals filing for personal bankruptcy would also need to present copies of recorded mortgages, deeds, and titles to vehicles, copy of automobile financing agreement, creditor mail received from the creditors in the last 90 days, copy of any security agreements with secured creditors, copies of any divorce decree, property settlement agreement, separation agreement and child support order.
Related Articles of Interest :
-
Declaring Personal Bankruptcy
10 August 2010 8:30 PM |
No Comments
Bankruptcy can be defined as a legally declared inability or incapability of an individual or organization to pay their creditors. Personal bankruptcy is an option limited to individuals who are bankrupt and does not include organizations or companies. The main objective behind filing a bankruptcy...
-
Chapter 7 Bankruptcy Qualification
10 August 2010 8:30 PM |
No Comments
Filing for bankruptcy has become the only relief for thousands of people who are experiencing massive debts. According to section 11, an individual, a partnership or a corporation or other business entities can qualify for relief under chapter 7 of the Bankruptcy Code. On October...
-
Personal Bankruptcy
10 August 2010 8:30 PM |
No Comments
As mentioned earlier, personal bankruptcy can be filed for under Chapter 7(for almost complete elimination of debts) and the more conditional and restrictive Chapter 13 of the federal bankruptcy code. Basically, the provisions under personal bankruptcy allow a genuinely insolvent individual to wipe the slate...
-
Personal Bankruptcy Laws
10 August 2010 8:30 PM |
No Comments
Individuals can file for personal bankruptcy as a last ditch effort when their credit reaches the limit. This helps them clear out a few debts by selling their assets and starting a whole new life without creditors beating at their door. The gives them an...
-
Filing Chapter 7 Bankruptcy
10 August 2010 8:30 PM |
No Comments
An individual, a partnership, or a corporation or other business entity is eligible for relief under chapter 7 of the Bankruptcy Code. A husband and wife may file a joint petition or individual petitions. A debtor files chapter 7-bankruptcy petition with the bankruptcy court. The...
-
Personal Bankruptcy FAQs
10 August 2010 8:30 PM |
No Comments
The most frequent question asked by people who file for personal bankruptcy is whether the creditors will stop calling. The answer to this question is yes and it is important to know the various procedures involved in the filing of bankruptcy for debtors to be...
-
Personal Bankruptcy Advice
10 August 2010 8:30 PM |
No Comments
The America of today means easy creditx97and tough repayments. When you can’t pay your debts, filing for bankruptcy is one option. If you want to avoid filing for bankruptcy, find out if you can sell some of your valuables to recover some money. Borrow from...
-
Bad Credit And Personal Bankruptcy
10 August 2010 8:30 PM |
No Comments
People, who are not able to pay their creditors back due to lack of resources, file for personal bankruptcy. After being declared legally bankrupt, a person’s financial record becomes public, which means that anyone who wants to know about the financial status of the person...
-
Filing Bankruptcy in Federal Courts
10 August 2010 8:30 PM |
No Comments
One cannot file for bankruptcy through US state courts, since exclusive jurisdiction is vested with Federal courts. The court charges a certain fee at the time of filing, depending on which category of bankruptcy is being filed for. Specifically, a court fee for filing for...
-
Chapter 7 Bankruptcy Law
10 August 2010 8:30 PM |
No Comments
Under the grant of authority given by Article I, Section 8, of the United States Constitution, Congress enacted the “Bankruptcy Code” in 1978, which is codified as title 11 of the United States Code. From October 17, 2005, the courts must charge a $220 case...