What Is Bankruptcy?
Bankruptcy is the legal inability of an individual or company to pay their creditors. Creditors also have the legal right to file bankruptcy petitions, referred to as “involuntary bankruptcies”, in the sense of getting something back of what they owed. However, it is mostly the individual or the company who can no longer pay the debts.
In The Point Of History
It is not nothing new in the history of human citizen. The concept of bankruptcy originated in England in 1542 when Laws 34 and 35 were enacted by King Henry VII . At that time it was not for the debtors, it was a relief for the creditors. The creditor could legally seize the debtors asset if the trader failed to pay the debt.
In the ancient Greece it was the male only to lend money. Females were not to do so. As the male were the citizens to count. If the male failed to pay the debt in time he had to release his entire household and property. Including his wife, children, and servants, and along with them, they would all be placed into “debt slavery” until all obligations were resolved.
Types of the Bankruptcy
According to Title 11 of the United States Code, the Bankruptcy Code lists 6 distinct types of Bankruptcy as follows:
» Chapter 7 – the quickest and simplest form of bankruptcy
» Chapter 9 - a government mechanism for municipal bankruptcies
» Chapter 11 - a rehabilitation used primarily by businesses and corporations
» Chapter 12 – used by families who farm or fish for a living
» Chapter 13 – a rehabilitation method involving a re-payment plan
» Chapter 15 – helps foreign debtors to resolve their debts
What is the difference between chapter 7 and chapter 13 bankruptcy?
Chapter 7 and chapter 13 are the most common bankruptcies filed by the consumer with approximately 65% of those filings being a Chapter 7. Businesses and corporations usually file either Chapter 7 or 11.
Bankruptcy is always not a pleasant thing to do. But some times it becomes an option. This discussion about the chapter 13 will clear some misinformation. This chapter 13 is used for individuals for court protection when their debts are excessive and they want to keep some allowed assets. There is something I want to make clear about it.
You will lose every thing you have: It is not like that. There are value limits, but your car, furniture, IRA, household goods, insurance value and your house are all covered under chapter 13.
You would not get any loan again: May be you can face a higher interest in the initial stage but if recover this time you would be able to come back to normal.
Filing bankruptcy: Chapter 13 has a eight year retention period. You would be able to buy a house after 2 years at a competitive rate in credit and after 4 years be competitive with credit cards. Some lenders would try to get a higher interest rate against you in that position, don’t get nervous find the lender who is a match for you.
Criminal!!: NO, there is legible situations which bankruptcy is available to use. This is not fair to call any body criminal without knowing the situation he/she went through.
There is life after chapter13. You would get chapter 7 comparative to it, if your income is to high or you have a home and other assets you want to keep.