According to Reuters News Service, United States bankruptcies fell 8 percent in the first six months of 2011 from the same period last year. The combination of households cutting back on debt, the economy slowly turning around, and banks pulling back on consumer credit are the reasons given the turn down of bankruptcies. There were 770,117 bankruptcies filed by this time last year compared to 709,303 for the first six months of 2011. A report by the American Bankruptcy Institute said the U.S. Economy has continued to “sluggishly recover from the deep 2007-2009 recession.” The unemployment rate, normally associated with bankruptcy rates, was 9.7 percent at the start of 2010 and has dropped to 9 percent today.
Although bankruptcy filings are still on pace for over 1.4 million bankruptcies this year, the bittersweet news provides a glimmer of hope for a certain group of Americans clamoring to get back on their feet after being financially knocked down by a depressed economy and housing market. Bankruptcy filings have been historically prominent when these type of economic situations have arisen in the past. Filing for bankruptcy is Americans Constitutional way of being able to start over with a fresh new financial start.
As a society, we have come a long way since the days of debtor prisons and states. The Constitution provided for our protection against those antiquated ways when it gave Congress the power to legislate bankruptcy law making the primary laws governing bankruptcy federal. State laws supplement the federal laws by clarifying the necessary details. The laws have been designed to protect both creditor and debtor making bankruptcy a legal proceeding designed to allow the honest person or business to work their way out of a bad financial situation, or in some cases, to start fresh.
Having to file or being forced to file for bankruptcy is not a sign of weakness, laziness, immorality, or dishonesty. Becoming bankrupt can happen for a variety of reasons including but not limited to a divorce, catastrophic event, foreclosure on personal or business property, failure to pay bills on time, loss of income, health problems, poor business decisions, bad timing, bad advice, or a poor economy. There is really no reason to view a bankruptcy protection as anything other than a tool used by our society to potentially help alleviate a bad financial situation between two parties.
There are two types of bankruptcies most individuals can file- a Chapter 7 or a Chapter 13. A Chapter 7 bankruptcy, commonly called liquidation of your assets, is normally the simplest and quickest form of bankruptcy. It is available to individuals, married couples, corporations, and partnerships. A Chapter 13 bankruptcy is the second bankruptcy available to individuals and is called a wage earners plan. It enables individuals with regular income to develop a plan to repay all or part of their debts.
If you are one of the ones who fell on hard times during this past recession and housing crisis, there are advantages and disadvantages for filing either type of bankruptcy. Which one you may qualify for is also an issue, and the qualifications are somewhat complicated. Bankruptcy laws in general are complicated, and common sense dictates you might want to consult with a bankruptcy lawyer who can help you understand how these complex laws may apply in your particular situation.
If you determine you are in need of relief from the stress associated with debt and you live in or around the metropolitan area of Indianapolis, Indiana, contact us here today at . We will help you find a bankruptcy attorney in your area that will help you with any questions you may have on bankruptcy law.
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