Individual Bankruptcy

Only the Bankruptcy Court can declare an individual bankrupt in the United States. The fact of bankruptcy is recognized and established by the court after the legal insolvency of the individual is proven. The bankrupt‘s property is then sold and repaid by these funds of his debts.

The bankruptcy procedure is regulated by criminal law and the bankruptcy code.

It is not recommended to try to hide your property from the court. If the court reveals this fact or proves that an individual is trying to commit bankruptcy fraud, it is a violation of U.S. criminal law and can lead to jail time.

The U.S. Department of Justice has established a special Executive Bureau to conduct bankruptcy proceedings for individuals. In each individual case, the Bureau appoints one or a group of federal managers. It is they who manage all processes until the bankruptcy procedure is fully implemented.

Here are some things to keep in mind about bankruptcy:

– A bankruptcy decision is always a last resort. Therefore, it is necessary to consider all possible ways out of the situation. For example, you can try to negotiate with your creditors to defer the repayment of debts. Or sell existing assets and repay debts.

– If there are no other ways and you have to declare bankruptcy, you need to analyze your debts. Among them, most often there are those that cannot be written off, even for a person declared bankrupt. These nuances are different in each state. If more than 50% of debts that cannot be written off even for a bankrupt, the problem will not be solved only by the procedure for declaring an individual bankrupt.

– Each state has its own nuances about which assets can and cannot be seized. Depending on local legislation, it can be your car, house, or even your wedding ring.

By declaring yourself bankrupt, you cannot write off such debts:

– Alimony

– Unpaid child benefits

– Debts that appeared after the bankruptcy announcement

– Medical debts for the treatment of injuries sustained while drunk driving

– Student debts for studies

– Debts for the last half a year before bankruptcy

– Some taxes

– Debts that arose from malicious actions and damage to other people or their property.

Debts are never written off for guarantors. If an individual is declared bankrupt, his debts will have to be paid by the one who vouched for him.

Although the law does not prohibit issuing repeated loans to persons declared bankrupt, companies are very reluctant to give them loans. After all, there is a huge risk that a person who has already gone bankrupt will not be able to repay a new loan. That’s why bankruptcy has positive and negative sides. The positive is the opportunity to start a new life without debts and obligations. The negative thing is that all bankruptcy records are kept for 10 years. Because of this, it is almost impossible to get a new loan from any American bank, even if the need for it is significant, for example, treatment, purchase of housing, or tuition fees for a child.