A bankruptcy attorney can bring clients through the tough situation of insolvency and into a better financial situation. This process can be hard to get through alone. It's best to trust a good lawyer. Troublesome financial situations are not uncommon in today's world. The cost of living is growing higher and higher. And it becomes easier to fall into a world of debt. This happens to many citizens each year. And unfortunately many people have to file for insolvency. These situations are indeed stressful. Most people associate the word bankruptcy with having hit rock bottom. But this doesn't have to be the case with the help of a good bankruptcy attorney. The right lawyer can help clients to fully understand the process as well as all of their rights. Most people don't know how this situation works.

So what exactly is bankruptcy? When people hear this word they often imagine someone being evicted and losing their home as well as other items. But it involves much more than this. What this process really offers is protection. When a person is broke, he or she can pay back debts under the federal court's protection. And there are different chapters that a person can file for to pay back these monies. The process is unfortunate but the outcome doesn't have to be. A reputable lawyer can be depended on to make the situation a lot less difficult. One thing a bankruptcy attorney can help clients figure out is what chapter they may be eligible to file for. There is chapter 7 for instance. With chapter 7, a person's belongings can be sold to re pay some of their major debts. Good news is that many of people's belongings are actually exempt from being taken. A representative can help clients to figure out whether certain items are exempt or not. And then there is chapter 13. With this chapter a person must have a strong enough income. This income will be used to repay some of the debts.

Once again, a lawyer can help clients to navigate this as well and figure out eligibility for these chapters. When tough financial situations occur, things can become very confusing and stressful. Not many people can get through these tough times alone. It is important to have a good representative. Without a good lawyer people may misunderstand how things are supposed to unfold and may miss out on knowing their rights. There is a way to avoid the risk of being taken advantage of. And this is by hiring a good lawyer. The right bankruptcy attorney will be affordable and sensitive to everything that the client is dealing with. The top task of this representative is to get the client into an improving financial situation when everything is solved. The situation of debt doesn't have to be as terrible as many people think. A bankruptcy attorney can be the difference between whether the process is simple or difficult. The problem of extreme debt is common in today's world but it doesn't have to mean the end of the world for anyone. Everyone can recover from this. All it takes is the right guidance and a skilled lawyer.

Prior to the 1800s, defaulting on one's debts could result in spending years in debtor's prison, at the very least. In ancient Rome and Greece, debtors could have their entire estates seized. They and their families could be sold into slavery. The debtor might even be executed. The problems that arise between a lender and a debtor were even mentioned in the Bible. The Torah proscribed a pattern of forgiving debts every seven years, while the Koran directed that a debtor be given additional time to repay his debts. Unsurprisingly, Genghis Khan called for the death of anyone who had to declare bankruptcy three times.

In medieval England, Henry VIII repealed bankruptcy laws allowing the mutilation of debtors and established debtor's prison instead. Elizabeth I created bankruptcy laws that allowed the creditor to initiate the proceedings and seize the debtor's possessions. It was not until after the American Revolution that bankruptcy laws changed to protect the debtor as well as the creditor.

The conflict between advocates of states' rights and the Federal government has been going on since the formation of the United States, and early attempts at regulating bankruptcy law were affected by this conflict. Many individual states imprisoned debtors, as was the custom in England. Bankruptcy affected people of all stations in life, including Robert Morris, one of the signers of the Declaration of Independence, who spent time in a debtor's prison. Ironically, Morris wound up bankrupt because he helped fund George Washington's army.

Bankruptcy Acts enacted in 1867, when the United States was freshly reeling from the economic devastation of the Civil War, and later in 1898 finally allowed the debtor to initiate a bankruptcy action himself and discharge his debts.

Individuals may now file bankruptcy under Chapter 7 or Chapter 13 of the bankruptcy law. Chapter 7 is most commonly filed because it allows the debtor to liquidate most holdings while keeping personal possessions, completely discharge most of his or her debts and start fresh. Chapter 13 is filed by individuals wishing to retain most of their holdings. Under Chapter 13, a payment plan is filed with the bankruptcy court which designates payments to creditors in order of importance. The debtor makes monthly payments to the bankruptcy court for a period of three to five years and the court pays the creditors. Both Chapter 7 and Chapter 13 can stop a foreclosure if they are filed before the foreclosure takes place. Once bankruptcy is filed, creditors may no longer contact debtors. People who are overwhelmed with medical bills and credit card bills usually choose Chapter 7 in order to wipe out as much of their debt as possibleFree Web Content, while people trying to keep property and vehicles may prefer Chapter 13.

Bankruptcy law in the United States is designed to ensure that no individual faces an undue burden as a result of his debts. If your debts are truly too much to handle, you can declare bankruptcy and some or all of the debt will be forgiven so you can start over with a (mostly) clean slate. Before you declare bankruptcy, though, you should know the top 10 facts about bankruptcy law. Bankruptcy laws are federal laws and the cases are brought in federal court. This means the bankruptcy laws are the same every place in the entire United States and you must bring the case in federal bankruptcy courts. While these courts may be located in multiple different states, they are still federal courts, not state courts. You have to petition for bankruptcy with a judge. Filing bankruptcy is not as simple as just turning in some legal papers… you actually have to go to court to do so. Chapter 11 Bankruptcy is for businesses only. Individual people cannot declare chapter 11. When a business declares Chapter 11 bankruptcy, the business is simply restructured – the company does not close and it can continue to operate, although a trustee may manage the assets. Some individuals may be required to file Chapter 13 bankruptcy. Under new bankruptcy laws in the United States, if your income is over a certain level – the median income for your state – and your disposable income – the amount you have left over after you pay all your debts – is high enough, then you will not be eligible to file the simpler Chapter 7 bankruptcy. Not all debts are forgiven when you file Chapter 13 bankruptcy. Under Chapter 13 bankruptcy, you are put on a court mandated payment plan. This means you don’t get a clean slate. You have to pay back a portion of your debts to creditors, depending on how much money you have available to you and how much you owe. Chapter 7 bankruptcy wipes out almost all debts. If your income is low enough to file for a Chapter 7, this will mean that almost all of your debts are eliminated. Debt collectors will not legally be allowed to contact you about those debts or to attempt to collect the money for those debts. Student loans and tax debt usually can’t be eliminated in any bankruptcy. Unless you can prove “undue hardship” which essentially means that you will be completely unable to maintain a nominal standard of living if forced to pay back your student loans or taxes – you will have to pay. The undue hardship test is very hard to pass. Normally, only those who have become totally and permanently disabled or who have otherwise experienced a dramatic shift that makes them unable to pay, are eligible. Creditors can occasionally force you into involuntary bankruptcy. If your debts are extremely high, creditors can petition the court to ask the judge to declare you bankrupt. If the judge does so, he may put you on a court mandated payment plan. You may be able to keep your home, even when you declare bankruptcy. There are homestead exemptions in most states that allow you to keep your house, no matter what kind of bankruptcy you declare. Your house generally can’t be worth more than a certain amount in order for it to be eligible for the exemption, and you will have to be or become current on your mortgage payments to stop the bank from foreclosing.

The filing and subsequent discharge of either a Chapter 7 or a Chapter 13 bankruptcy may eliminate some types of personal income tax liability. There are, however, certain restrictions which must be met in order to completely eliminate personal income tax liability through bankruptcy. Some personal income taxes may be eliminated through the filing and subsequent discharge of a Chapter 7 bankruptcy. The following requirements must be met for the personal income tax liability to be eliminated in a Chapter 7 bankruptcy: • The tax return must have been filed on time • The filing should not be fraudulent • The tax return must have been filed over three years ago as of the bankruptcy filing date (e.g. IRS debts for the last three years generally, would not be dischargeable) • Alternatively, in some cases, if the tax return was filed late, was not fraudulent and was filed over two years ago as of the date of the bankruptcy filing, the tax debt may be deemed dischargeable. For example, if you filed your 1986 tax returns in 1990, and in 1994 filed a Chapter 7 Bankruptcy, this tax debt would be dischargeable as long as it was not related to a fraudulent filing and the tax debt was assessed by the IRS over 240 days before the bankruptcy filing. Even if all of the above requirements are met, personal income taxes can still sometimes be non-dischargeable in a Chapter 7 bankruptcy. This occurs when the IRS has placed a tax lien on the debtor's property. In this case, the tax liability must be paid in full, but the IRS may be forced to accept a payment plan or substantially eliminate penalties through the filing of a Chapter 13 bankruptcy. In a Chapter 13 bankruptcy, the debtor makes payments to a bankruptcy trustee and the bankruptcy trustee in turn distributes a percentage of the payment to the creditors. A Chapter 13 plan is filed with the court which determines the amount distributed to each creditor by the trustee. A bankruptcy judge can force the IRS to accept extended payments on personal income tax liability through a Chapter 13 plan. This type of bankruptcy works well when the IRS has a tax lien on personal property and the debtor has enough income to pay back the IRS over a three to five year period. Tax penalties may be discharged in a Chapter 13 bankruptcy because they are lumped in with all the other unsecured creditors of the debtor, such as credit cards. These are generally only paid back through the bankruptcy at 10% or ten cents on the dollar. Filing either a Chapter 7 or a Chapter 13 bankruptcy may be a useful tool for debtors to eliminate tax liability.

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