Arizona bankruptcy filings
Bankruptcy refers to the declaration of a debtor as legally insolvent. The debtor might either be an individual or a legally incorporated body (eg. corporations). The term connotes pain and anguish for everyone associated with it. For a debtor, it implies loss of esteem and prestige before others. While for a creditor it means more headache. For not only does he lose his precious money but also there is no guarantee that it would be retrieved completely after the liquidity proceedings.
There are two types of bankruptcy: Involuntary Bankruptcy, where creditors or lenders file a petition against the debtor, and Voluntary Bankruptcy, where the debtor files a petition claiming inability to meet creditor's requirements. However, in the latter instance, there is a lurking danger of debtors willfully defaulting under the cloak of law.
Bankruptcy law is federal statutory law contained in the Title 11 of the United States Code. Bankruptcy proceedings are supervised by and litigated in Bankruptcy courts which are a part of the 94 federal judicial courts. Thus, the bankruptcy cases cannot be filed in a state court. Bankruptcy laws help defaulting debtors get a fresh start by liquidating their assets to pay their debts, or by creating a repayment plan.
In 2005, the The Bankruptcy Abuse Prevention and Consumer Protection Act (Bankruptcy Act) was amended to require that most individual debtors complete a special briefing from an approved credit counseling agency before filing a bankruptcy case. Its stated purpose was to ensure that consumers make an informed choice about bankruptcy, its alternatives, and consequences. This acts seeks to discourage potential defaulters from taking refuge under this act by pointing out the irreparable damage that may be caused by the lowering of their credit ratings.
Debtor education is another novelty of the new act. It is basically an instructional course concerning personal financial management. Studies have found it to be more effective than credit counseling for the former is preventive in nature that helps in averting future debt troubles while the latter is more of a postmortem exercise.
So if you\' re on the verge of bankruptcy and wish to declare yourself as insolvent, analyze your options carefully before taking the plunge.
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