Over the last couple years, over encumbered Americans have been searching for a way to eliminate their debt without losing all their property. The creditors want the debtors to believe that if they file for bankruptcy a big truck will pull up and haul away all their belongings. Because of this, many of these people searching for a solution get caught up in debt consolidation plans. Not knowing the benefits of filing bankruptcy can many times get these debtors in a further financial bind agreeing to a contract they can't afford. Before an individual signs up for one of these debt consolidation companies they should take the time to visit a bankruptcy attorney, if it's even just for comparison's sake.
After taking the time to visit a bankruptcy attorney, the individual will find out that when filing bankruptcy rarely do they lose any property at all. A Chapter 7 bankruptcy is called a liquidation bankruptcy, but most people that qualify to file Chapter 7 rarely have any property that won't be protected by bankruptcy exemptions. This is where a bankruptcy attorney can really be a big asset to a debtor filing for bankruptcy. Typically, they will know what's expected and what exemptions will fly in the district that they practice. In the case of a Chapter 13 bankruptcy, there is a repayment plan that allows the debtor to keep all their secured property if they can afford to continue paying on it.
When it comes down to it, bankruptcy wouldn't work if the law didn't include bankruptcy exemptions. We might as well go back to the days of debtor's prison, because if the debtor lost everything when filing bankruptcy there would be less risk-taking and basically no capitalism. What's interesting is, the states that have more generous bankruptcy exemption laws tend to attract more entrepreneurs. Small business owners want to know that if their business should fail, they would be able to file for bankruptcy and save something.
For many, bankruptcy exemption laws can be very confusing and a bankruptcy attorney will be a big help. If the debtor has moved out of state prior to filing bankruptcy, the bankruptcy attorney might have to delay the filing and possibly have to use the bankruptcy exemptions from the state that they moved from. The rule of thumb in a bankruptcy filing is the debtor needs to reside in the state for two years to use that state's exemption laws. The bankruptcy court is understanding and knows that people move so the debtor has to reside in the state they are filing bankruptcy for the greater part of 180 days or basically three months. If the bankruptcy exemptions from your state don't float your boat you can always use the federal bankruptcy exemption laws.
Although, this might sound confusing, the good news is a bankruptcy attorney of your liking can take the edge off the pain of filing bankruptcy. A bankruptcy attorney will be experienced with the local exemption laws and be able to protect the maximum amount of property while wiping out all dischargeable debt. In the end, the debtor can find themselves on the road to becoming debt-free.
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