Many individuals find themselves in the unfortunate position of owing more money than they have coming into their respective households. This shortage of disposable income is caused by many factors including outsourcing, increasing interest rates, rising consumer prices, stagnant wages, decreasing wages, and increasing lay-offs. When a person owes money to creditors he simply can’t pay, garnishments, repossessions, and foreclosures can occur. To keep this from happening and to give a person a fresh financial start in life, it’s advisable to look into bankruptcy.
Bankruptcy is a legal status a person applies for when he can’t pay his debts. Chapter 7 Bankruptcy is one of the primary chapters of the Bankruptcy Code. This type of bankruptcy provides for a person to sell his qualifying assets to pay off his creditors. This is known as liquidation. Certain assets are exempt from consideration. It’s not required for a person to file a repayment plan as defined in Chapter 13 bankruptcy. Instead, nonexempt assets are sold and the proceeds used to pay off creditors. To file for this legal status, a party must be an individual, a partnership, a corporation, or another type of business entity. The discharge of some debts is usual if a party is an individual, but this is not a guarantee.
Article I, Section 8, of the United States Constitution authorizes Congress to make laws uniform in nature pertaining to bankruptcy. Congress passed the Bankruptcy Code in 1978, which is title 11 of the United States Code. The bankruptcy process for Chapter 7 Bankruptcy is governed by this code along with the Federal Rules of Bankruptcy Procedure. Local rules also dictate the procedural features of bankruptcy.
When a person applies for bankruptcy, he will have to prove his inability to pay his debts. He will also have to provide evidence of this current income, living expenses, and past due bills. Seeing a qualified attorney such as Sean C. Paul Attorney at Law will enable a person to decide if this legal maneuver is a good course of action for him. A person can also visit this professional’s website for more details.