Title:
Bankruptcy
Word Count:
287
Summary:
The legal provision of bankruptcy, though sometimes misused, is a progressive and often merciful process.
By it, a hopelessly indebted individual can make an official declaration of financial inability and be free of
obligation. This may be on a temporary or permanent basis, depending on the degree of insolvency.
Keywords:
Bankruptcy, Types Of Bankruptcy, Filing Bankruptcy, Bankruptcy Laws
Article Body:
The legal provision of bankruptcy, though sometimes misused, is a progressive and often merciful process.
By it, a hopelessly indebted individual can make an official declaration of financial inability and be free of
obligation. This may be on a temporary or permanent basis, depending on the degree of insolvency.
With new amendments in US laws, there is little or no social or corporate stigma attached to filing for
bankruptcy. Filing for bankruptcy, though a matter of public record, no longer means that it becomes a
matter of public knowledge. Effectively, this is an incentive for the bankrupt party to make another attempt
at financial solvency. An individual can file for bankruptcy under Chapter 7(for irreversible insolvency) or
Chapter 13(for temporary insolvency).
The benefits of filing for bankruptcy include restoration of bank credit via a secured credit card. This
requires a certain deposit to be made, but a new line of credit can be established within two years of doing
so. Meanwhile, the bankrupt person has assured freedom from harassment by previous creditors.
The US Congress amended the US bankruptcy code(ratified in 1978) in 2005, and further amendments were
made on October 17, 2005, to discourage the abuse of the generous provisions available.. In fact, the passing
of these amendments was preceded by a literal stampede on bankruptcy courts by people hoping to beat their
enactment.
Under the revised Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, (BAPCPA),
someone filing for bankruptcy is subjected to stringent tests to establish genuine insolvency and present
income. Another provision is that people dwelling in any particular state, must be residents of that state for
at least two years to be eligible. Bankruptcy laws do not provide a shelter against alimony and child support
obligations.
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