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Personal
Bankruptcy Information
©
2003 by Mark Carney, First American Debt Consolidation
and Loans
Personal Bankruptcy is a legal action that offers protection from
creditors when debts are not able to be repaid.
There are 2 categories of personal Bankruptcy:
In Chapter 7, there is a portion of the individual's property
that is protected. The remainder of the property is eligible to be
sold and the proceeds are used to pay creditors. Once these payments
have been made the balance of the debt is eliminated. Under the
terms of Chapter 13 (Reorganization) bankruptcy, a payment plan is
set up under the supervision of the court system. Individuals are
given 3 to 5 years to repay their creditors. Certain assets are
protected that otherwise would not be under Chapter 7.
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The total number of Bankruptcy's in the U.S. continues to grow.
In the first quarter of 2003 alone there were over 400,000 filings.
(American Bankruptcy Institute) The vast majority of these cases
fall into the category of Chapter 7 "liquidations". With household
consumer debt at an all time high in relation to disposable income
this trend may very well continue into the foreseeable future.
Declaring Bankruptcy creates serious financial problems in
regards to an individual's credit. By Federal law a bankruptcy can
stay on a person's credit report for up to 10 years. This
information results in a low credit score, which makes it much more
difficult to obtain a loan or a line of credit. When loans are
obtained it is generally at a substantially higher interest
rate.
Personal bankruptcy is a very serious situation and there are a
number of alternatives that should be considered before
deciding to file.
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About the
author:
Mark Carney is a professional consultant
with First American Debt Consolidation, a debt
consolidation
service
specializing in
financial education, credit counseling, and debt reduction services
nationwide.
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