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Bankruptcy Basics

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  • jdimmitt60
    Article: Bankruptcy Basics word count: 479 characters per line: 60 Author email: jimdim815@aol.comPermission to reprint this article for your e-zine or on
    Message 1 of 1 , Jun 1, 2003
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      Article: Bankruptcy Basics
      word count: 479
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      Author email: jimdim815@...

      Permission to reprint this article for your e-zine or on your web
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      Bankruptcy Basics
      by James H. Dimmitt

      According to the American Bankruptcy Institute "household debt is at a
      record high relative to disposable income." The Administrative Office
      of the U.S. Courts reported that the number of filings for the year
      ended March 31, 2003 "exceeded 1.6 million for the first time in any
      12 month period," a 15.1 percent increase from the previous year.

      There are two basic types of personal bankruptcy: Chapter 7 and
      Chapter 13. Chapter 7 Bankruptcy and Chapter 13 are legal proceedings
      that are available to a person to cope with a financial crisis.
      Personal bankruptcy must be filed in a federal bankruptcy court. You
      will have to pay about $160.00 in court fees. Attorney fees are

      Chapter 7 bankruptcy involves the liquidation of all your assets that
      are not exempt from the bankruptcy settlement. Exempt property may
      include automobiles, some household furnishings, and property needed
      for work-related use; for example if you were a mechanic the tools you
      use to perform your work would be exempt from the bankruptcy settlement.
      Exemption amounts vary from state to state.

      Under this plan the court appoints a trustee to handle the liquidation
      of your non-exempt property. The trustee can sell or turn over your
      property to your creditors. The court discharges your debts and you
      are now debt-free. You are allowed by law to file a Chapter 7
      bankruptcy once every six years.

      A Chapter 13 bankruptcy allows you to keep property, like a mortgaged
      house (provided there are no liens on it) or a car, as long as you
      have a steady income. A Chapter 13 bankruptcy is a court-ordered and
      approved repayment plan to your creditors. This plan allows you to
      use your future income to pay back your debts over a 3-to-5 year
      period without surrendering any property. Once you complete payments
      under the plan, your debts are discharged by the court.

      Both types of bankruptcy may get rid of unsecured debts and stop
      foreclosures, repossessions, garnishments, utility shut-offs, and debt
      collection activities. Both provide exemptions that allow people to
      keep certain assets, although exemption amounts vary. A bankruptcy
      will not erase most child support, alimony, fines, taxes and some
      types of student loans.

      Most financial experts agree that a bankruptcy should always be the
      last resort used for managing your debts. Bankruptcy has long lasting
      results. A bankruptcy remains on your credit report for a period of
      10 years, making it more difficult to obtain credit in the future.
      You should also know that although your bankruptcy disappears from
      your credit report after 10 years, you may still be asked by future
      employers or lenders if you have "ever" filed for bankruptcy

      Disclaimer: The information contained in this article is for
      informational purposes only. The author is not herein engaged in
      rendering legal, insolvency, tax, or other professional advice and

      © 2003, James H. Dimmitt
      James is editor of "TO YOUR CREDIT", a weekly free
      newsletter. Subscribe to the newsletter by visiting
      He is also author of "Identity Theft - How to Avoid Becoming the Next
      Victim!" available at http://tinyurl.com/bc45
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