Personal Bankruptcy Rules Made By Bankruptcy Courts

It is a challenging task for individuals to cope with severe debt situations if they are not appropriately aware of the various complexities involved in legal proceedings. It is always advisable to get professional help either from an experienced and knowledgeable attorney or a reliable debt solution service to know your legal rights and the best solution that can help you deal with the crisis situation.

While there are various debt solutions available, bankruptcy can be one of the most beneficial ones to help you clear your debt burdens and allow you to make a new beginning. There are various forms of bankruptcies that are designed to meet the requirements of individuals and companies with different financial situations.

Personal bankruptcy is a procedure that can be availed only by individuals to legally declare their insolvency. According to individual financial conditions, bankruptcy courts have categorized this procedure into two types, namely, chapter 7 bankruptcy and chapter 13 bankruptcy. For individuals possessing non-exempt assets, chapter 7 bankruptcy can be beneficial. On filing for bankruptcy, the court seizes these assets, and liquidates them to make debt payments to creditors. However, the laws also have provisions to allow individuals to retain many of their valuable properties like clothing, jewelry, furniture, insurances, pension funds, inexpensive cars etc.

On the other hand, individuals making a decent earning in spite of having a debt burden can apply for chapter 13 bankruptcy. In this procedure, the court negotiates with the creditors to make a repayment plan for the debtor on the basis of their annual income and monthly expenditures. The debtor is supposed to make debt payments over a fixed period of time, and only after they have made all their basic monthly expenditures. After the lapse of the fixed time period, any remaining debt amount gets cleared. It cannot be guaranteed that even if an individual is cleared of their debt burden once would not suffer it again further in their lives. Hence bankruptcy courts allow individuals to file for personal

bankruptcy as many times as they need to get rid of financial crises. However, in certain cases, the filings cannot be done as often as you require. In case of chapter 13 bankruptcy, you can submit petitions as many times you and as frequently as you require. Chapter 7 bankruptcy, however, does not allow you to make two consecutive filings without maintaining a gap of at least 8 years.

There are certain basic rules that have to be followed by individuals while filing for bankruptcy:

It is compulsory to complete a credit counseling course under the guidance of a licensed credit counselor. During the filing you are required to submit the certificate of completion to the court.

It is also compulsory for individuals to get through a means test for proving their eligibility for bankruptcy filing. The means test is carried out to make sure that your annual income does not surpass the median income for your family size in your state.

Once you are done with the filing, you need to pursue a Personal Financial Management course. On failing to complete this course, the court has every right to dismiss your case without a release.