What is bankruptcy?

 

Bankruptcy was provided for the Constitution, which called for Congress to create bankruptcy laws. The major law in effect prior to the current one was the Bankruptcy Act or 1898. This Act was overhauled in the 1970s to result in our present bankruptcy code. That code became effective in 1979.

Further attempts (like one that happened in 2001) have been made to revise the bankruptcy code. As well as these federal laws, each state in the US has its own laws about debt. Meaning, although you can file bankruptcy on your own, the best approach is to hire a bankruptcy lawyer that will best assist you in your legal issues with filing. Many lawyers advertise cheap rates for bankruptcies depending on the type you are seeking, just beware of your needs and make sure you have good advice.

Bankruptcy’s purpose

The idea of bankruptcy is not to throw you out on the street after discharging all of your debts. Also, it is not a Scarlet Letter that you must wear around in public. Actually, the idea of bankruptcy is the opposite of this. It provides people in dire financial situations the chance to eliminate themselves from the burden of debt in order to regain a productive member of society. Rather than being labeled as a failure and shamed in public, it can be seen as somewhat honorable to own up to your debt problems by using this solution to over come extenuating conditions that are way out of control with your personal finances. If you are in dire financial trouble, you need to come forth with legal recourse to get out of the dreadful situation and start over.

While this assessment to bankruptcy may sound a bit brave and optimistic, there is still some stigma in the world attached to the person who has declared themselves bankrupt. There is also a lot of personal anguish that you will need to live with if you declare a bankruptcy. But the relief provided and the chance to start over at square one quickly outweighs the feelings of worthlessness or anxiety attached to personal bankruptcy filings.

History worth knowing about bankruptcy

There are 3 major dates in the history of bankruptcy law in the US resulting in the federal laws about bankruptcy that are in effect at this time. They are The Bankruptcy Act of 1898, the bankruptcy Reform Act of 1978 and amendments to the Bankruptcy Code in 1986. These important dates are often referred to in bankruptcy proceedings also.

Bankruptcy Reform

Creditors, credit card companies especially, who lose a lot of money from customers filing bankruptcy each year, are constantly lobbying to get the laws to become tougher on people filing bankruptcies. They want to who can file. There really are two opposing views to bankruptcy. Credit card companies do not want to have to bear the burden of consumers’ inability to control their personal finances and financial problems. Then, there are the consumers themselves along with the majority of bankruptcy lawyers who feel that the credit card companies prey on consumers who do not have much money by handing out high interest rated credit cards to them setting them up for almost certain failure or perpetual debt to the company, thusly they should share the burden of the atmosphere they are said to create in the first place.

While this article has touched on some interesting aspects of bankruptcy and helped you get a good feel for what bankruptcy is, be sure to keep reading all of the debt free articles concerning personal bankruptcy on this site.

Part 2…

 

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