Filing Bankruptcy Defined in 2013

Filing Bankruptcy Defined in 2013 "According to Webster's dictionary, it refers to the quality or condition of bankruptcy, total failure, or poverty. In today's terms, you lack sufficient funds to cover your expenses. In today's society, a major cause of bankruptcy is living far beyond one's means. Between 2000 and 2007, we observed a substantial quantity of this. The creditors were releasing funds for individuals to spend as if they were drunken sailors. They would lend money to a dog to purchase a home. There were no checks and balances, and as a result, many Americans overindulged. Now that it's time to pay the bill, the individual is insolvent. In 2007, the financial markets nearly collapsed, causing banks to scramble to reduce their liabilities. Consequently, the majority of banks eliminated available credit card and credit line balances. People who had been living on credit were suddenly compelled to confront the music. This resulted in millions of Americans declaring bankruptcy in order to halt the aggressive creditors. Just when we believed these errors were behind us, the Fed pushed through quantitative easing, and now creditors are once again pushing cash to consumers. No one truly knows how this will conclude, but if history repeats itself, none of us will fare well.When someone files for bankruptcy, they are acknowledging that they cannot afford to pay their debts and are seeking legal action to start over. In the business world, it is more of a do-over because the company entered into an unfavorable contract with one of its employees or vendors. Companies file for bankruptcy to reorganize and eliminate their debts. Many businesses emerge from this procedure lean, mean, and profitable. I do not believe this was the intent of Congress when they created bankruptcy. The intention was to give decent, hardworking Americans a fresh start in times of need. The intention was for businesses to be able to recover from poor business decisions or unsuccessful product launches. Entrepreneurs would not take the risk of bringing their inventions to market if bankruptcy were unavailable. A debtor's penitentiary would pose an unacceptable danger.In 2005, the credit industry lobbied Congress for significant bankruptcy code revisions. At that time, Congress was informed that too many individuals filing for bankruptcy were able to repay at least a portion of their debt. Along with pre-bankruptcy credit counseling and post-bankruptcy financial management courses, Congress added a means test that, in essence, qualifies a person to file for bankruptcy. It did not make Chapter 7 bankruptcy impossible, but it made it considerably more difficult. With the US debt nearing $17 trillion and 101 million Americans currently receiving food stamps, it is only a matter of time before the number of individuals filing for bankruptcy increases again.
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