Bankruptcy Legal Forms

When financial pressures become to great, Chapter 7 Bankruptcy can help an individual erase specific unsecured debts and restructure others.

Filing for Bankruptcy is one of the most stressful decisions an individual person can make. People file for bankruptcy for many different reasons, including:

Job loss
Crushing medical expenses
Business Failure

Debt overwhelms these individuals and it is near impossible for them to see beyond their money issues. The federal government recognized the problem and in response established the federal bankruptcy laws, which are designed to give overburdened debtors a “fresh start” through what is called a bankruptcy discharge. The bankruptcy forms offered by FindLegalForms.com will help you decide, plan, and organize for filing for bankruptcy.

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Bankruptcy FAQ

What is Bankruptcy?

Although the legal definition of bankruptcy varies with the type of bankruptcy being filed, a general definition of bankruptcy essentially boils down to an individual or group of individuals filing for legal and financial protections because of credit and debt problems. Although an individual can file for bankruptcy, it’s also possible for legal entities such as companies and corporations to file for similar protections.

The causes of filing for bankruptcy can also vary. The inability to pay for medical expenses, a mortgage or make other routine payments on debt are generally the reasons people file for bankruptcy. From a legal perspective, a bankruptcy can provide an individual or even a company with a “fresh start;” however, financial and credit issues can sometimes linger.

What are the potential consequences of filing for Bankruptcy?

There are both positive and negative consequences of filing for bankruptcy. The positive consequences are mostly legal, since they address an individual or business’ need to have some sort of protection from creditors seeking payment on debt. The negative consequences typically range from a damaged credit rating to more abstract consequences such as a damaged business reputation.

What does Bankruptcy protect me from?

Each type of bankruptcy comes with its own protections, but generally it may be wise to consider filing for bankruptcy if you have noticed some of the following problems:

Wage Garnishment: Protection of your job wages will typically come with, for example, a declaration of Chapter 7 Bankruptcy.
Unsecured Debt: Many credit card and medical bills fall under the umbrella of “unsecured debt” and much of this debt can be wiped out with a “fresh start” bankruptcy filing. (Note: “secured” debt usually refers to debt that is secured by a piece of property or collateral; in the event if lack of payment, these creditors may be able to claim that property. For example, a mortgage would be considered secured debt).
Property Repossession: In the case of secured debt, repossession is sometimes unavoidable. However, some types of bankruptcy may allow for greater flexibility in paying off secured debt and therefore allow you to keep the property that secured the debt.

What are the common “chapters” of Bankruptcy?

Three of the most common ways to file bankruptcy are Chapter 7, Chapter 11 and Chapter 13.

Chapter 7 Bankruptcy, the most common type, generally applies best to individuals without a lot of assets to protect under bankruptcy. Because so much debt (usually unsecured) is wiped out with a declaration of Chapter 7 Bankruptcy, individuals who are really in dire circumstances financially will typically gravitate toward Chapter 7.

In Chapter 13 Bankruptcy, another common type filed by individuals (or “consumers”), there is still an aim at repaying your creditors so debt is not totally wiped out. However, the protections granted here may allow for more flexibility in repaying these debts. It is not quite the “fresh start” of Chapter 7, but can ultimately be less damaging to your future finances. Additionally, you will be able to keep many of your assets, though portions of income you generate in the coming years might go to your creditors.

Chapter 11 Bankruptcy best applies to businesses; however it can sometimes be used by individuals with considerable assets to protect. It is often used by corporations as a way of restructuring in financially difficult times.

What will I need to file for Bankruptcy?

It’s best to start generating a list of all of your assets and debts. You’ll also need to put a lot of thought into the decision, as you likely won’t be able to file bankruptcy again for many years and even then, to do so could do a lot of damage to your long-term credit prospects.

There is no “minimum” amount of debt required to file for bankruptcy. This is one of the reasons it’s important to pursue other options before filing for bankruptcy. There is a chance your debt problems can be solved through different means, such as directly contacting your creditors and arranging new payment plans.

How much do Bankruptcy laws vary from state to state?

Many of the bankruptcy laws that apply to individuals and corporations are actually federal laws. For this reason, there is not as much variance in state-to-state filings for bankruptcy as you might expect for other documents and written contracts. Even so, it pays to know how to go about filing for bankruptcy in the state you live in and understanding any potential local laws that might apply to you that don’t apply to people filing for bankruptcy elsewhere.

What kind of information should I keep track of when filing for Bankruptcy?

Generally, there are four measurable items you’ll want to keep track of:

Assets: Anything that you own property-wise, as well as any income-generation property that you might own (such as rental property);
Debts: Information about your mortgage(s), credit card debt, etc.;
Monthly Income: Both wage and non-wage income should be included;
Monthly Expenses: Be sure to include total expenses, not just expenses that you pay on debt that has accrued.

The more accurate a picture you have of your own financial situation, the better you’ll be able to judge whether or not bankruptcy is right for you. If you still decide to file for bankruptcy, you will need to have this information available.

What kinds of debts remain after filing for Bankruptcy?

It depends on the type of bankruptcy you file. But it’s important to remember that many debts cannot be extinguished by bankruptcy, including student loan and tax payment debts. Additionally, legal judgment debts will still exist even after bankruptcy has been filed.

What are the requirements for a Bankruptcy filing to be valid?

Once you’ve made the decision to file for bankruptcy, it’s important to give an accurate picture of your financial situation in your filing. The validity of the filing will be assumed once you’ve signed the filing and all of the information has been freely and accurately volunteered.

Understanding Chapter 7 Personal Bankruptcy

One of the mistakes people make is believing that bankruptcy is a solution to all of their financial problems. “If I’m ever in a jam with all this debt, at least I have bankruptcy.” And while bankruptcy can be a valid financial option for many people who are overloaded in their financial lives, that doesn’t mean it’s an end-all, be-all for anyone’s finances, even if they’d rather go back to square one than deal with their current situation. Understanding Chapter 7 personal bankruptcy will be key to understanding not only what it can do to help you, but also why it should be avoided if you can.
 
But what’s the best way to understand Chapter 7 bankruptcy? Let’s handle it from two angles: why you would want to avoid bankruptcy, and then in what situations you would want to file Chapter 7.
 
Why You Would Want to Avoid Chapter 7 Personal Bankruptcy
 
Naturally, there are some dangers to personal bankruptcy that you’ll want to be aware of, particularly in the case of Chapter 7 personal bankruptcy. Though these are the simplest bankruptcies for both individuals and businesses, they don’t provide comprehensive coverage from all debts (for example, student loan debts always have to be repaid, no matter what happens to you in bankruptcy). Naturally, filing bankruptcy will also negatively affect your credit, meaning that when creditors look up your report in the future, they will see that you once filed bankruptcy and had some debts wiped away. This will affect the credit you receive for the rest of your life.
 
Understanding credit is essential to understanding the downsides to personal bankruptcy, because credit will affect how much money you pay for loans, whether or not you’re even able to receive loans, and generally affect the options you have for mortgages, rental agreements, and business loans. Even if you are granted loans, a bankruptcy can drive your credit rating low enough that you will have to pay a lot more in interest than you would have otherwise had to pay.
 
When Chapter 7 Personal Bankruptcy is the Right Option
 
There are some times, however, when Chapter 7 bankruptcy might be right for you. It is, after all, the most common form of bankruptcy in the United States for a reason.
 
When Chapter 7 bankruptcy occurs, a person or business will essentially “cease operations” (although the phrase better applies to businesses). In the case of businesses, the assets of the company are sold off to the creditors in order to make payments as best as possible even if these payments are not the amount of total money owed. The benefit to this is that the person or company in bankruptcy does not have to pay the total amount of owed money and receives certain legal protections from having to do so.
 
Naturally, a bankruptcy should only be sought in dire financial circumstances, as the results of them can have wide-ranging effects whether it’s a personal or a business bankruptcy. A business going bankrupt can affect the jobs of a lot of people, while personal bankruptcy can affect almost every area of a person’s life.

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