The Essentials of Bankruptcy Law According to a comprehensive, careful study by Harvard University researchers, over half of all bankruptcies in the United States are the result of overwhelming medical expenses. In their study, researchers found that over 1.5 million families had sought the bankruptcy court's protection because their insurance did not cover the costs of serious medical treatment, and they could not pay the bills from their own resources. The same study found that extended unemployment ranked as the second leading cause of bankruptcy, and researchers noted that, since the serious recession began, the rates of those filings have increased more than 50%. Bankers and financial planners emphasize the seriousness of declaring bankruptcy, stressing that you should consider it your last resort. If, for example, you have fallen behind on your house payments and fear foreclosure, you carefully should consider federally guaranteed mortgage refinancing or loan modification; Congress and the administration now have approved three different mortgage relief programs, and more than ten million families qualify. Similarly, if you have accumulated a great deal of credit card debt, qualified professional credit counselors may help you renegotiate your obligations and satisfy your creditors without severe damage to your credit rating. Moreover, if you owe a great deal of money in back taxes, an attorney or enrolled agent may help you submit an "Offer in Compromise," which will reduce your indebtedness to the IRS or your state tax authority. If, however, your debts have gone so far beyond your capacity to pay that you stand in jeopardy of losing everything, then bankruptcy will help you protect your assets and start over again with a clean slate. Learn the bankruptcy laws so that you may choose wisely as you complete the process. Most importantly, you must know which kind of relief you seek: one of the chapters in the bankruptcy law requires you to liquidate your assets for the sake of paying off your debts; the other allows you to restructure your debts and retain most of your major property. An attorney will help you understand the subtleties and intricacies in the bankruptcy laws.
Published on Dec 5, 2012