WHAT IS BANKRUPTCY?
Brandon FL Debt Relief Lawyer
What is bankruptcy? Bankruptcy is a legal process by which a debtor (someone
owing money) can file for court protection from creditors seeking repayment
of loans. Bankruptcy laws in the United States trace their origins back
to bankruptcy laws in England, as far back as 1542, under Henry VIII.
The earliest U.S. Congress enacted bankruptcy laws to protect Americans
in the new republic from creditors seeking to reclaim property, often
under very harsh terms of loan agreements. As a nation, we have always
placed a priority on helping people get a fresh start and a second chance.
As bankruptcy laws evolved and changed over the past 200 years, creditors
such as banks and private lenders (including credit card companies) have
sought to place a stigma on people who have needed to take advantage of
court protection. Naturally, creditors don't want to willingly give
up their right to collect on the money they have loaned, but collectors
often went too far, leading to the Fair Debt Collections Practices Act
(FDCPA) of 1977, in an effort to regulate a collections industry that
was beginning to use harsh harassing tactics to scare debtors into paying
It is important to remember that bankruptcy is a legal process, involving
the U.S. federal court system and an appointed judge and trustees. That
means that both sides are guaranteed equal protection under the law. When
you are filing for bankruptcy, you are petitioning the court to eliminate
or consolidate your debts, to protect you from further legal action by
your creditors. The court must review your petition and decide whether
your case has merit to proceed, just like any lawsuit. Your petition is
not an automatic approval to walk away from your debts. Your creditors
will work equally hard to protect themselves from losing the money they
loaned you. Yes, they will have their day in court, too (known as the
Creditors' Hearing for Chapter 7 debt elimination bankruptcy and the
Plan and Confirmation Hearing for Chapter 13 debt consolidation).
Golden Law Group will answer all of your questions to help you determine whether bankruptcy
is the best debt relief solution for you and your family.
Chapter 7 bankruptcy is the preferred petition for people wishing to
discharge their unsecured consumer debts, such as credit card debt. But not everyone
qualifies. In response to an increase of Chapter 7 filings over the past
decade, laws were passed to ensure that only individuals who meet a strict
eligibility requirement will qualify. Petitioners must complete a
means test, to determine a required ratio of debt to income before Chapter 7 is allowed.
This is not correct. The means test does not have anything to do with
a debt to income ratio but is instead focused on disposable income. If
the debtor has disposable income under the means test a presumption of
abuse arises and the debtor will unlikely be able to file a Chapter 7.
Many people file
Chapter 13, which allows the petitioner to consolidate all debt, including student
loans and government debt into a restructured monthly payment plan, supervised
by the court. Chapter 13 is often the preferred option for people who
can meet their debt obligations, but are hampered by excessive interest
rates, late fees and penalties. Chapter 13 debt consolidation is typically
a three or five-year plan that can save the petitioner thousands of dollars
in total repayment. It is also possible to
discharge debt under Chapter 13.
Contact an attorney at The Golden Law Group for a free consultation to discuss
your current financial circumstances. Attorney Don Golden is a
certified bankruptcy specialist, as certified by the American Board of Certification. The firm's
attorneys are experienced, knowledgeable and compassionate about your situation.
From offices in Brandon and Bradenton, the firm represents clients in
bankruptcy courts throughout the Florida Central Gulf Coast region.