The Basics of Bankruptcy: Part One: An Introduction to Who, What & Why? Skip to main content

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The Basics of Bankruptcy: Part One: An Introduction to Who, What & Why?

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If you’re like so many Americans experiencing tough economic times, you may feel completely overwhelmed by your current financial situation and unsure as to what options actually exist to alleviate it. Maybe you’ve been unable to modify your mortgage, hit with the costs of an unexpected medical situation, dealing with high interest credit cards or are navigating through the pitfalls of unemployment or underemployment with little understanding of how to pull yourself out of the subsequent a financial hole.

At times like these it’s often important to get “back to the basics,” separating fact from fiction in order to make an informed decision that can get you back on track for a better financial future.

In this series, The Basics of Bankruptcy, we’ll try to help you start 2011 on solid fiscal footing with straightforward information designed to explain what bankruptcy is, the options at hand and the features common to any bankruptcy filing.

In Part One of the series, we’ll begin, like any new endeavor, with “introductions.”

Meet bankruptcy.

Now more than ever, bankruptcy recognizes and addresses the world we live in: a system of economic imperfections necessitating a body of jurisprudence that mitigates and balances the financial and emotional losses that drift from those imperfections. Bankruptcy begins with the realization that assets are finite despite pressures to distribute them according to interests and priorities. As such, bankruptcy addresses two important questions: how can our laws meet the needs of debtors whose assets cannot pay their debts and what is the basis in the law for determining which interests in these assets take priority? Put simply, bankruptcy balances your needs for financial relief with your creditor’s interests in being paid.

What Bankruptcy Offers You
The most important question that most people have concerning bankruptcy is “what can bankruptcy offer me?”   First, bankruptcy offers millions of debtors just like you with a fresh financial start, often wiping away unsecured debts, liens, and liabilities taxing your financial health. Secondly, in the process of wiping away debts, bankruptcy provides relief from pressures and harassment from creditors. Third, bankruptcy can give a unique opportunity to reorganize your finances, helping you hold onto otherwise encumbered assets or business interests that otherwise would be dissolved, repossessed, foreclosed upon or otherwise removed from your possession.

What Forces People Like You to Seek Bankruptcy
In today’s post recessionary environment, the reasons debtors seek the safe havens of bankruptcy are as varied as the people themselves; however, common scenarios that force folks just like you into a filing are: pending foreclosures; vehicle repossessions; pending lawsuit(s); unmanageable credit card debts; threats to business operations; and/or repeated calls/letter from creditors clamoring to get at assets.

Types of Bankruptcy Available to You
The most common forms of personal (or consumer) bankruptcy are Chapters 7 and 13 of the Bankruptcy Code. Chapter 7, otherwise known as a liquidation bankruptcy, is the most common form for individuals and, in some cases, can be used for business entities. Chapter 13, in turn, provides reorganization of finances for individuals with regular income and unsecured debt less than $336,900 and secured debts less than $1,010, 650. If you’re looking for reorganization strategies for business entities or liquidation for high-debt individuals, Chapter 11 may be your best option. Debtors seeking reorganization or liquidation of family farms can turn to Chapter 12. While less common, beleaguered municipalities can turn to Chapter 9 bankruptcy and international or cross-border individuals may seek debt relief under Chapter 15. In future parts of this series, we’ll go into detail on the more common forms of bankruptcy (Chapters 7, 13, 11).

Who Can Help With Your Bankruptcy
As a result of the nuances and intricacies of bankruptcy law, it is essential to begin the bankruptcy process with an experienced bankruptcy attorney that knows the ins and outs of the bankruptcy process and can assist you throughout your case. If you live in North Carolina, contact the Law Offices of John T. Orcutt TODAY for a totally FREE debt consultation. Just call toll free to 1-888-234-4181, or make your appointment online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button.

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