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What is Bankruptcy?
Bankruptcy is a legal method of eliminating debt and providing a means for debt-oppressed people to obtain a "fresh start." In many cases, bankruptcy means the elimination of the debt that you owe to your creditors. They are two primary forms of bankruptcy, Chapter 7 and Chapter 13.
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Who can file Chapter 7 bankruptcy?
You must reside or have a domicile, a place of business, or property in the United States or a municipality. You must not have been granted a Chapter 7 discharge within the last 6 years or completed a Chapter 13 plan. You must not have had a bankruptcy filing dismissed for cause within the last 180 days. It must not be a "substantial abuse" of bankruptcy to grant the debtor relief.
Generally speaking, if after you pay the monthly expenses for necessities there is not enough money to pay the remaining monthly debts, then granting a discharge would not be an abuse of Chapter 7. It would not be fundamentally unfair to grant the debtor relief under Chapter 7 or Chapter 13.
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Why is it legal "wipe out" our debts?
More so than in any other time in our country's history, our economy is based on consumer debt. In fact, in this age of multibillion dollar corporate bailouts, easy credit and relentless bombarding of seductive messages cajoling us to "charge, consume, buy" it is not surprising that so many people are drowning in debt.
For many of us, this debt is insurmountable and is causing family problems and feelings of hopelessness and even suicide. With credit card interest rates of 18-21%, many feel like modern day indentured servants. Many times, the debt is occasioned by unforeseen events such as loss of a job or medical bills, but more often it is simply poor planning. Nevertheless, in instituting our bankruptcy laws, Congress recognized that responsible, well-intentioned people could from time to time run into financial problems. By allowing you to recover from your debt burden you will be able to start afresh, look to the future and become a more productive member of society. This is good for you and for good for society as a whole.
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What is Chapter 7 Bankruptcy?
This is commonly referred to as "straight bankruptcy" and it is the most commonly filed form. Only individuals (not businesses or partnerships) may obtain a discharge in a Chapter 7 proceeding. Large credit card debt and other unsecured bills coupled with few assets, typify the filer of this form of bankruptcy. In the vast majority of cases this type of bankruptcy is able to completely eliminate all of the filers debts.
Will I have to give up any of my property to my creditors?
The vast majority of filers get all or most of their debts discharged (wiped-out) without giving up any of their own property. This is because federal as well state laws provide exemptions for your property. Exempted property is property such as household goods and personal belongings, which you may keep despite your bankruptcy.
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