What Are The Laws About Filing Bankruptcy?

by : jarnold

A commonly asked question today is, what exactly comprises bankruptcy law? This question can not be answered in one sentence. But if we were to simplify matters, then we would say that it is that branch of the law that concerns those people who have had to face financial failure. This occurs when he or she is officially not able to pay off the money that he or she owes, for whatever reason. Even though this may be asked for by those want payment, at least in part, of what is owed to them by someone who has fallen on hard times.

More often than not, the person who is facing financial ruin files for bankruptcy.

Now, what these laws deal with is settle the debts with those who are owed money, often a small part of the total owed. It also gives the non-payer a second chance since the law frees him of most of the debt that is to be paid. How exactly is this achieved? Well the answer is simple - this is where the distribution of the "non-exempt" assets comes into play. Also, the person going into bankruptcy does not have any control over his available funds.

During the course of the whole action, the person who is in debt is also shielded from further collection action by disallowing the creditors to sue or attempt to collect the entire debt.

However, many often pretend to be in a bad way just to escape paying off the money that is owed, even though one has the means to do so. Another deception would be receiving goods that one has no intention of paying for. Many use loopholes to get their business done that cannot always be declared as illegal but are not exactly legal or ethically right. This is similar to tactical bankruptcy which is used for an individual's own benefits and which is not against the law specifically, but can prove to be dangerous. Today, people face financial devastation more often than in earlier years. Companies do not make the grade, so they file for bankruptcy. Sometimes these cases are categorized.

Today, however, they are not treated in a different manner. They are not made to undergo intense scrutiny in one area when the reason of the bankruptcy is in a different area. This only results in a waste of time for both the parties.