Important Aspects You Must Know About Bankruptcy Laws

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Today’s guest post is brought to us by Wystan North. Wystan regularly writes on bankruptcy related issues like Ohio bankruptcy, Filing Bankruptcy In Ohio, Chapter 13 bankruptcy, and Chapter 7 bankruptcy.

Important Aspects You Must Know About Bankruptcy Laws

If you need to file for protection under the bankruptcy laws of Chapter 7 or Chapter 13 in order to attain debt relief, there are a number of aspects you should know about bankruptcy laws.

These laws are designed to permit debtors who can’t pay their debts, to discharge or restructure these debts while still allowing creditors to regain as much of the monies owed as possible. Because the situation of the individual or legal entity, such as a company, seeking protection under the bankruptcy laws can vary widely, there are different kinds that cover specific situations. These laws are written in the different chapters of the United States Bankruptcy Code.

In general, the Chapter 7 rules apply to personal or corporate liquidations, while those of Chapter 13 apply to personal reorganization bankruptcies. For large corporations that need to restructure huge amounts of debts and assets, the bankruptcy laws of Chapter 11 generally apply. Before you file for protection under the bankruptcy laws, you will have to know which chapter you must file.

Means Test

The choice is not yours; instead, you must take a means test that determines which bankruptcy laws apply to your situation.

The means test measures your income against that of the state median, and if it is below it, you must file Chapter 7, or liquidation bankruptcy. However, if your income is above the state median, you must file for protection under the bankruptcy laws of Chapter 13.

It is important to realize that the state you file bankruptcy in can have a huge impact on which bankruptcy laws apply to your situation. There is another aspect of bankruptcy law that is defined by your location: exemptions.

Exemptions

Exemptions are assets you may exclude from the bankruptcy proceedings, which means that you are allowed to keep them. Exactly which assets are excluded from your proceedings is defined by the bankruptcy laws of your state.

When you file your petition, it is imperative that it complies with all necessary bankruptcy laws. If it contains any incorrect information, or it is not complete, the court will not accept it. A very important aspect to bankruptcy laws pertains to your creditors. If you are filing for protection under the bankruptcy laws of Chapter 7 or Chapter 13, it’s more than likely that creditors and collection agencies have been harassing you.

Once your petition has been accepted by the court, the bankruptcy laws state that the Trustee must notify all your creditors of your filing and the automatic stay goes into effect. The automatic stay means that your creditors must stop all collection actions against you, even foreclosure, until a decision has been made in your bankruptcy case.

How about you all? Have you ever had to file for bankruptcy? What are the key points that people need to know to get through the tough time in life?


Share your experiences by commenting below!


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