BANKRUPTCY

USING CREDIT TO PURCHASE

SERVICES IS VERY COMON
THROUGHOUT HISTORY.
“THE CONGRESS SHALL HAVE
THE POWER TO…ESTABLISH
UNIFORM LAWS ON THE
SUBJECT OF BANKRUPTCY
THROUGHOUT THE UNITED
STATES” (ART. I, SEC. 8[4])
 CREDIT AND DEBT

WE ARE A SOCIATY THAT DEPENDS ON

CREDIT FOR MOST ASPECTS OF OUR
LIVES.

THE CREDIT INDUSTRY HAS BECOME A

MAJOR ECONOMIC FORCE IN AMERICAN
BUSSINESSES
 CREDIT CARDS
CHARGE A FEE TO
THE RETAILER, WHO
ACCEPTS IT FOR
PAYMENT; AND
CHARGES THE CARD
HOLDER INTEREST
IF THE AMOUNT
OWED IS NOT PAYED
IN FULL.
 DEFAULTING ON CREDIT
OBLIGATIONS
WHEN A PERSON CANNOT PAY
HIS CREDIT OBLIGATION, HE IS
CONSIDERED IN DEFAULT. THIS
MAY HAPPEND DUE TO LOSS
OF JOB, ILLNESS, ACCIDENT OR
CREDIT IRRESPONSABILITY
 CREDIT COUNSELIG AGENCIES

 IF THE DENTOR CONTACTS THOSE

HE OWES, AND CAN’T COME TO
AN AGREEMENT ON PAYMENT, HE
MAKE SEEK THE ASSISTANCE OF A
CREDIT COUNSELING AGENCIE.
 ONE AGENCY THAT IS
RECOMENDED IS THE CONSUMER
CREDIT COUNSELORS.
 BANKRUPTCY

 BANKRUPTCY IS A FEDERAL MATTER;

THUS BANKRUPTCY ACTIONS ARE FILED IN
A SPECIAL FEDERAL COURT.
  THERE ARE THREE BASIC
CLASSIFICATIONS, CALLED CHAPTERS:

 CHAPTER 13: IS CALLED A DEBT

REPAYMENT PLAN AND REQUIRES THAT
THE DEBTOR OWES LESS THAN $350,000 IN
SECURE BEDTS, $ 100,000 IN OTHERS

 CHAPTER 11: ALSO OF REPAYMENT, BUT

IT IS FOR THOSE HAVING MORE THAN
$350,000 IN SECURE DEBT, AND MORE
THAN $100,00 IN OTHERS
 CHAPTER 7: COMMONLY REFERED AS
STRAIGHT BANKRUPTCY, A DEBTOR WHO
IS UNABLE TO REPAY HIS DEBT MAY HAVE
THE TOTAL DISCHARGE BY THE
BANKRUPTCY COURT.
 ADVANTAGES OF FILING
BANKRUPTCY
 ONCE THE DEBTOR FILES FOR
BANKRUPTCY HIS DEBTORS WILL BE
NOTIFY.
 IF THE PETITIONER IS SUED AND
MONETARY JUDGEMENT HAS BEEN
ISSUED, THE MARSHALL WILL NOT BE
ABLE TO SEIZE AND SELL HIS ASSETS.
PROPERTY EXEMPTIONS

 EXEMPT PROPERTY IS NOT TAKEN FROM

THE PETITIONER, HE IS OFTEN ALLOWED
TO KEEP MOST OF HIS PROPERTY THAT IS
NOT SECURE FOR A PARTICULAR DEBT.
 BUT WHEN FILING A CHAPTER 7, THE
TRUSTEE OF THE COURT IS AUTHORIZED
TO SELL THE ASSEST THAT ARE NOT
EXEMPT.
 SECURE DEBT VS. UNSECURE
DEBT
 SECURE DEBT IS THE ONE WITH A
CONTRACT THAT SPECIFIES THAT THE
LENDER CAN REPOSES AN ASSET
ACCORDIN TO THE CONTRACT
 UNSECURE DEBT IS THE ONE WHERE
THERE IS NO WRITEN CONTRACT, PUTING
ANY COLLATERAL AGAINST THE DEBT
 DEBTS THAT CANNOT BE
DISCHARGED IN BANKRUPTCY
 SECURE DEBTS
 DEBTS THAT WHERE NOT IN THE
BANKRUPTCY PETITION
 STUDENT LOANS
 CHILD AND SPOUSAL SUPPORT
 ANY JUDGEMENT OWED AS A RESULT OF
BEING SUED FOR DRUNKEN DRIVING
 ANY DEBT INCURRED THROUGH FRAUD OR
LYING TO A CREDITOR
 DEBTS INCURRED JUST BEFORE FILING FOR
BANKRUPTCY
 BANKRUPTCY PETITIONS BY
HUSBAND AND WIFE

 A HUSBAND OR A WIFE CAN

FILE SEPARATE BANKRUPTCY
PETITION.
 HOWEVER THE NON-
PETITIONING SPOUSE MAYBE
HELD LIABLE FOR SOME OR
ALL OF THE BEDT OF THE
PETITIONING SPOUSE.
 ONE SPOUSE CANNOT
TRANSFER ALL THE ASSETS OF
THE COUPLE.
CHAPTER 13 DEBT REPAYMENT

 IS DESIGNE TO ALLOW THE DEBTOR TO

PAY OFF PART OR ALL OF HIS DEBT WITH
IN 3 TO 5 YEARS.
 THE PAYMENT ARE MADE THRUE A CORT
TRUSTEE, WHO DESTRIBIUTES THE
PAYMENTS
 HE MUST HAVE A REGULAR SOURCE OF
INCOME
CHAPTER 7 BANKRUPTCY

 IF AN ACCIDENT, ILLNESS OR LOSS OF

EMPLOYMENT HAS CAUSED THE
PETIONER TO FILE FOR PROTECTION
UNDER THE BANKRUPTCY LAWS.

 TO DISCHARGE ALL DEBTS WITHOUT

REQUIRING HIM TO MAKE PAMENT
BANKRUPTCY AS A LAST RESORT

 IS A SERIOS STEP AND SHOULD BE

CONSIDERED ONLY AFTER ALL OTHER
MEANS OF SOLVING THE CREDIT
PROBLEMS HAVE BEEN EXHAUSTED
 INFORMATION ABOUT BANKRUPTCY
REMAINS IN THE CREDIT RECORD FOR
ABOUT 10 YEARS
 CANNOT BE FILED MORE THAN ONCE
EVERY SIX YEARS
FILING AND ATTORNEY’S FEES

 FEES ARE SET BY STATUE AND VARY

DEPENDING ON THE CHAPTER
 CHAPTER 7 COSTS $175
 CHAPTER 13 COSTS $150
 THE ATORNEY MAY CHARGE A FEE
BETWEEN $500 AND $5000 FOR SERVICES
 USUALLY THE PETITIONER IS REQUIRED
TO PAY BEFORE THE PETITION IS FILED
VOLUNTARY VS. INVOLUNTARY
BANKRUPTCY
 VOLUNTARY WHEN THE PERSON FILES
FOR BANKRUPTCY PETITION AS THE
DEBTOR

 INVOLUNTARY IS WHEN A CREDITOR

INITIATES A BANKRUPTCY AGAINST A
DEBTOR
THE BANKRUPTCY PROCESS,
HEARINGS AND DISCHARGE