Chapter 7 of the Title 11 of the United States Code is a very good instrument which can help a person handle debts that are not manageable however not all qualify. People file for bankruptcy for various reasons. Bankruptcy influences the rates of interest on loans and credit cards.
Chapter 7 of the Title 11 of the United States Code, the Bankruptcy code, directs the process of dealing with individuals and organizations that have in law been declared not in a position to pay their creditors. The history of bankruptcy law dates back to as early as 1942. Closely related to Chapter 7 is Chapter 13 which allows debtors who have regular income to come up with a concrete plan of how to repay all or part of the debt during a given period within which the creditor is not supposed to take any recovery action. (www.uscourts.gov)
Who may file Chapter 7 bankruptcy
Chapter 7 is a very good tool of dealing with devastating debts. However, it is not available to all. Those who qualify are those who have no enough income to meet their financial obligations and cannot therefore use Chapter 13.The income of a person filing Chapter 7 should pass the all new means test if at all its higher than the median. The purpose of the mean test is to determine whether a person has enough disposable income (net of certain allowable expenses) to repay all or some of the unsecured debt.
Further, people who had previously received a bankruptcy discharge within the last eight years under Chapter 7 and within six years incase of Chapter 13 dont qualify. A dismissal of a previous bankruptcy within a period of 180 days disqualifies a person from succeeding in a Chapter 7 case. (www.uscourts.gov)
Any person who defrauded his or her creditors cannot enjoy Chapter 7.This applies also to those who had concealed some assets so that they can keep them for themselves.
How has this changed over the past few years
The latest changes regarding bankruptcy law are geared towards making it harder for people to file bankruptcy. For example certain people are now restricted from filing chapter 7, previously one had just to chose between chapter 7 and Chapter 13.Previously,there was no means test which is now being applied to determine those who qualify for Chapter 7. (Broude, 2005) The other important change is that requiring people to undergo credit counseling with one of the agencies approved by the United States Trustees Office. This will help people determine whether to file for bankruptcy or make an informal arrangement on how to pay the debt.
What are some of the reasons why people file bankruptcy
Many people file bankruptcy for one of the following reasons stop foreclosure, remove community debt, stop collector harassment as well as eliminating the legal obligation to pay many more debts.
How does bankruptcy affect interest rates on loans and Credit cards
The relationship between bankruptcy and interest rates on loans and credit cards is positive. Those who have filed for bankruptcy will pay more interest rates since they are viewed as relatively riskier than those who have never filed for one. Those who have never filed for bankruptcy are viewed as more financially stable. (Broude, 2005)
Chapter 7 of the Title 11 of the United States Code, the Bankruptcy code, directs the process of dealing with individuals and organizations that have in law been declared not in a position to pay their creditors. The history of bankruptcy law dates back to as early as 1942. Closely related to Chapter 7 is Chapter 13 which allows debtors who have regular income to come up with a concrete plan of how to repay all or part of the debt during a given period within which the creditor is not supposed to take any recovery action. (www.uscourts.gov)
Who may file Chapter 7 bankruptcy
Chapter 7 is a very good tool of dealing with devastating debts. However, it is not available to all. Those who qualify are those who have no enough income to meet their financial obligations and cannot therefore use Chapter 13.The income of a person filing Chapter 7 should pass the all new means test if at all its higher than the median. The purpose of the mean test is to determine whether a person has enough disposable income (net of certain allowable expenses) to repay all or some of the unsecured debt.
Further, people who had previously received a bankruptcy discharge within the last eight years under Chapter 7 and within six years incase of Chapter 13 dont qualify. A dismissal of a previous bankruptcy within a period of 180 days disqualifies a person from succeeding in a Chapter 7 case. (www.uscourts.gov)
Any person who defrauded his or her creditors cannot enjoy Chapter 7.This applies also to those who had concealed some assets so that they can keep them for themselves.
How has this changed over the past few years
The latest changes regarding bankruptcy law are geared towards making it harder for people to file bankruptcy. For example certain people are now restricted from filing chapter 7, previously one had just to chose between chapter 7 and Chapter 13.Previously,there was no means test which is now being applied to determine those who qualify for Chapter 7. (Broude, 2005) The other important change is that requiring people to undergo credit counseling with one of the agencies approved by the United States Trustees Office. This will help people determine whether to file for bankruptcy or make an informal arrangement on how to pay the debt.
What are some of the reasons why people file bankruptcy
Many people file bankruptcy for one of the following reasons stop foreclosure, remove community debt, stop collector harassment as well as eliminating the legal obligation to pay many more debts.
How does bankruptcy affect interest rates on loans and Credit cards
The relationship between bankruptcy and interest rates on loans and credit cards is positive. Those who have filed for bankruptcy will pay more interest rates since they are viewed as relatively riskier than those who have never filed for one. Those who have never filed for bankruptcy are viewed as more financially stable. (Broude, 2005)
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