A married couple who were both practicing psychiatrists had a combined income of $128,000 per annum. They managed to accrue personal debts totalling $44,000, and also were committed to a $53,000 mortgage on their comfortable suburban New York home. They werenandrsquo;t in arrears, not even over their heads. But they simply wanted more discretionary spending power.
Their solution to the problem?
They decided to file for bankruptcy, and by doing so immediately lowered their debt load to a mere 10 cent on the dollar, repayable on an extended schedule in smaller more affordable amounts. An officer in one of their finance companies had advised them that they could easily refinance the mortgage or even sell the house.
But you will see in a moment why that was not necessary.
Conventionally, bankruptcy is usually a desperate and last resort for those so deeply in debt (and, harassed by creditors) that there seems to be no other viable solution. The typical profile includes low-income, undereducated clerical workers or laborers, and even transient non-homeowners. Common age groups are those who are in their twenties or those over sixty five years of age.
This isandnbsp;NO longer the case.
Today's profile includes people with good jobs, even families with two or more incomes. Itandrsquo;s not surprising to find somebody with a six-figure income declaring bankruptcy. The route of bankruptcy NO longer comes out of a dire need. But itandrsquo;s now a way by which people can rid themselves of debts that cramp their lifestyle. Of course, taking this path for these reasons raises moral and ethical issues. However, what we are discussing here is a legal avenue put in place by governmental authority.
Nowadays, the most common contenders for bankruptcy comprise of recent college graduates who file in order to avoid paying back government-guaranteed student loans.
Their justification? They feel society owed them an education.
These days you will also find the older, "keep up with the Joneses" types filing for bankruptcy. Everyone from suburban executives to Wall Street professionals who have over extended themselves in credit or are unwilling to live within their financial means.
The introduction of the Federal Bankruptcy Act of 1978 made the bankruptcy process just a whole lot easier. This significant change in law radically liberalized personal filing procedures in the name of consumer rights.
Chapter 7 makes no reference at all to the debtor's income.
It simply gives debtors the legal right to clear the slate by turning over all their assets except those expressly exempted to creditors.
Among the exemptions are:
Up to $7,500.00 equity in the debtor's house (15,000 if both file); $4,000.00 in accrued dividends; $1,200.00 in automobile equity; $500.00 in jewelry; $200 per category of household items (including clothing, books, etc.) and more!
Chapter 13 requires that debtors show only a regular income to handle a reasonable three-year pay-back plan. The court's definition of reasonable happens to be as little as 1% to 10%, even when a payment of 50% could easily be managed.

Article Submitted By: TopLawyer
This Article Has Been Read 102 Times

---

Remember: The article body, title, author bio and links may not be changed or removed. By publishing this article, you agree to all the terms in our Terms of Service.
Get the HTML for reprinting the article to your site

Rating: Not yet rated

--Choose-- 0 1 2 3 4 5

Bankruptcy Filing Information

Strategies for Chapter seven Individual bankruptcy

Just A Few Notes About Chapter 13 Bankruptcy Information

Can You Alter A Chapter 13 Bankruptcy Directly Into A Chapter 7?

Comparison of Chapter 7 and Chapter 13 Bankruptcy

Could Bankruptcy Reform Help Homeowners?

Filing for Bankruptcy Mandatory Counseling Requirements

How to Rebuild Your Credit after Bankruptcy Filling

The Filing Process for Chapter 7 Bankruptcy

The Process of bankruptcy

Debt credit counseling

Basics one need to know regarding Bank Loans, Stocks and Bankruptcy Law

Tax Firm Now Offering Bankruptcy Representation to California

Frequently Asked Questions about bankruptcy

Various Reasons Why Small Companies Do Not Succeed

---