Quote:
Originally Posted by juan ruiz
Just out of curiosity, why do they have "bankruptcy" to begin with  |
Because we don't have debtors' prisons.
A few observations/comments.
Should be an absolute last resort. Damaging your credit is generally not a consideration because once you get to the point of bankruptcy its already pretty much destroyed.
Bankruptcy reform laws make it increasingly difficult to file chapter 7 (liquidation; i.e., turn over your assets and walk away) especially if your income is ablove your state's median income. Likewise chapter 13 is more difficult (reorganization resstructuring your debt and setting up a payment plan allowing you to keep some assets and paying part, if not all your debt back under the oversight of a trustee).
You can only file chapter 7 once every 7 years; you can have numerous successive 13's.
Preferential payments/transactions: Anything done within 1 year with an insider; i.e, family member, business associate can be "undone"; 90 days for a non-insider; i.e. credit card companies but purchase of "luxury" items before bankruptcy will be heavily scrutinized.
State laws control what is exempt from seizure by your creditors...e.g., Florida allows you to exempt your primary residence...most states do not.
Generally retirement accounts are protected from creditors; ditto life insurance with cash values; ditto tools of your trade.
federal tax debt is generally not dischargeable; ditto student loans; ditto alimony/child support.
Generally you will not be able to keep your home without reaffirming the mortgage debt. although there are some provisions to "cram down" mortgage balance to the value of the home.
Bankruptcy should be avoided at all costs.
Many prospective employers will not hire you if you have a bankruptcy.
Once had a client showe up at a meeting of creditors wearing a Rolex...they took it from him on the spot. I do not fool with bankruptcy any more since the reform legislation.