Admit it, we have all went through desperate times. From natural calamities to man-made causes, we have all experienced getting a little short on cash. This is especially apparent nowadays wherein everything’s just getting more expensive and there are a lot of bills to pay. There are mortgages, the car insurance, medical bills, electricity, water, internet, cable and all of these expenses take up most of the family’s income. Add the everyday necessities like food and the salary the workers receive might not be enough for the whole family. It can also be very unfortunate if there is an economic crisis and everyone is affected by it. People lose jobs all the time because of various reasons and some just cannot find a job that is right for them. So in the meantime for them to survive, they must get some form of compensation. This is where debt comes in.
In the ancient times, there were many ways a debt can be paid. The Code of Hammurabi or also known as “an eye for an eye” (read more) is one way of doing so. If one person owes anyone anything, it shall be paid the same way, shape or form. If the person owes 50 gold coins, then he or she should be paid 50 gold coins. No more, no less. Slave trade also became a form of paying debt, and it was one of the more inhumane ways of repaying it. Children and women were the usual “prizes” given away for payment, while the men usually do manual labor in exchange. As time went by and slavery was being abolished across the world, the modern concepts of debit and credit came in. Interest rates also became the norm and money became the most common form of payment until today.
Debt comes in many forms, usually monetary like credit cards. It is understandable for someone to borrow money especially if it is truly needed and you do not have enough money to support yourself and possibly your family. Many students take the student loan offer just to get through school and pay it for the rest of their lives. Some borrow money from others just to have food to eat for that day. Many others use this as a tool to have what they desire even if it is not yet beyond their reach. This is how many people turn to debt to serve their problems. However, once debt accumulates, this might lead to bankruptcy. (Learn more about managing debt by clicking this link: https://www.thebalance.com/how-to-manage-your-debt-960856)
Bankruptcy, in the simplest form, is a status of a person or organization wherein they cannot pay their debt. This is usually under the federal law. When a state of bankruptcy is filed in court, the United States Bankruptcy Court will take a hold of the case (usually) and it will follow mandatory state rights. Due to this, there can be certain differences in handling bankruptcy cases in relation to each state. For example, a bankruptcy case can be dealt a little differently in Texas than in Oklahoma. It can get a little complicated once different laws in different states interact with one another, so let us skip that for now and focus more on the general concept.
There can be two ways a bankruptcy state can be filed for petition. If the debtor itself will process for the petition, then this is called a voluntary bankruptcy. This is the most common practice because usually debtors themselves would file for it if they feel overwhelmed by all their debts. However, if the debtor fails to file, the creditors themselves would file for an involuntary bankruptcy. This usually happens when the creditors are already pushing for the debts to be settled immediately especially against a company. For whatever the kind of case it might be, each case is usually referred under a “chapter”. There are many chapters in the Bankruptcy Code and one of which is Chapter 7: Liquidation.
This is the most common case in the United States of America. This involves the process of liquidation, or the selling of the debtor’s assets. A trustee will take over the assets and once they are sold, the proceeds will be paid to the creditors. In the cases of big companies or organizations, this can also be paid in another way by acquiring the company itself along with its employees. However, this will usually affect the employees because some or all of them can be retrenched.
For personal bankruptcies, some properties cannot be liquidated by law. An example of this is exempt properties, and these cannot be passed through a will or used as a payment for debt under the Bankruptcy Code (Read it here: https://www.investopedia.com/terms/c/chapter7.asp). The calculation of these properties varies from state to state as well. A Chapter 7 bankruptcy will stay on a credit report for 10 years from the date of filing it. This can affect credit scores and will take on a domino effect on other facets of life.
If you think you want to file for bankruptcy, you can do it for yourself. There are forms you need to fill out and pass for petition. However, it would be best to have a bankruptcy lawyer in Spokane Valley around to prepare everything for you. These lawyers are trained in bankruptcy cases and can help you in securing your assets and properties. They can also inform you more about the intricacies of your case because each can be different from one another. If you live near Washington, a professional lawyer can help you with your dilemma. Ask one today!