Category Archives: Bankruptcy

People face off with police during the general strike against austerity measures, which coincides with the International Workers Day, in San Juan, Puerto Rico, on May 1.(Photo: THAIS LLORCA, EPA)

Puerto Rico's bankruptcy is poised to bludgeon investors,threaten the livelihood of American citizens who planned their retirement on the island's promises, andunderminestate governments.

The bankruptcy may also provide hope of fiscal sustainability and improvedservices for Puerto Rico, as the U.S. territory attempts to dig out of $74 billion in debt and $49 billion in pension promises.

But the ripple effects remain shrouded in uncertainty as the U.S. judicial system runs, for the first time, a debt-cutting legal process known as Title III of a 2016 law dubbed the Puerto Rico Oversight, Management and Economic Stability Act (PROMESA).

"Nobody really knows exactly whats going to happen,"S&P Global Ratings credit analyst David Hitchcock said. "Its highly uncertain."

To be sure, the legal process is similar to the Chapter 9 municipal bankruptcies of Detroit in 2013 or Orange County, Calif., in 1994.

An oversight board governing Puerto Rico will aim to negotiate debt-cutting deals with creditors with the goal of achieving a viable "plan of adjustment" that a federal judge deems reasonable and fair.

But previous municipal bankruptcies have demonstrated that the clash between Wall Street creditors, mom-and-pop vendors, retirees, politicians, union officials and special interests is a recipe for inertia.

"I dont know that a dawn is coming, but its going to get darker,"Municipal Market Analytics analyst Matt Fabian said in an interview.

What's clear, however, is that in the absence of action Puerto Rico's downward spiral willcontinue, as the island's economy remains distressed and as thousands of people flee to the mainland.

To many Americans, Puerto Rico is a vacation spot and nothing more. But this bankruptcy could hit closer to home than they realize. Here's why.

Fellow American citizens could continue to suffer.

Puerto Ricans are American citizens. They are suffering under the weight of heavy debt, government bureaucracy, high taxes and poor access to economic opportunity.

This bankruptcy may lead to their pensions and health care insurance taking hits, while services could also suffer cuts. Fabian estimated that some pensioners may get cuts of up to 20%.

But that may be necessary to help stabilize the island. Puerto Rico has lost 20% of its jobs since 2007 and 10% of its population, sparking an economic crisis that worsens by the day.

Still, without actionto improve services such as public safety, health and education, the island's population loss could continue or even accelerate.

Your retirement investments may take a hit.

Since Congress voted 100 years ago to exempt Puerto Rican bonds from federal, state and local taxes, those investments have attracted many people seeking tax-free retirement income.

Despite years of trouble, more than 40% of U.S. municipal bond funds still have exposure to Puerto Rico debt, totaling $7.82 billion in holdings, according to Morningstar data provided to USA TODAY.

What's more, U.S. mutual funds hold about $8.38 billion in Puerto Rico debt, according to Morningstar.

Those bonds could be subject to steep cuts in bankruptcy, and while insurance may cover some of those losses, anyone who bet their portfolio on Puerto Rico should be nervous.

The bankruptcy "could have the advantage of a potentially global solution that might arrive more quickly and with lower legal costs, but it also strengthens Puerto Rico's protection against legal claims," Hitchcock said in a research bulletin.

It might be more expensive for your state to borrow.

Puerto Rico's crisis shows that large governments can reach a point of no return, endangering investment principal.

That may give investors pause before they acquire debt from cash-strapped states and cities, Fabian said. That could increase borrowing costs for state and local governments, which mustcut spending or raise taxes to make up the difference.

"I think it will make life more difficult in places like Illinois and New Jersey and Connecticut, where investors are already reluctant to loan the governmentmoney," Fabian said."Its going to increase investor trepidation."

The case could lead to a political eruption in Washington.

Although Washington's response to Puerto Rico's action was largely muted Wednesday it was, after all, not unexpected the unintended consequences of PROMESA may soon trigger a political firestorm.

If and when discussion of pension cuts heats up, expect angry missives from members of Congress perhaps even from lawmakers who voted to create this debt-cutting process in the first place. Others may be upset about bondholders taking cuts.

"Members of Congress have a variety of interests in what sacrifices are made in this restructuring," said Melissa Jacoby, a University of North Carolina professor and expert on municipal bankruptcy.

But don't expect a bailout anytime soon. President Trump has blasted the possibility of rescuing Puerto Rico, and it's highly unlikely Republicans on Capitol Hill will show any interest.

Follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey.

Read or Share this story: https://usat.ly/2pLw9jA

Continued here:

Why you can't ignore Puerto Rico's bankruptcy - USA TODAY

As legislators and the executive branch renew their efforts to repeal and replace the Affordable Care Act this week, they might want to keep in mind a little-known financial consequence of the ACA: Since its adoption, far fewer Americans have taken the extreme step of filing for personal bankruptcy.

Filings have dropped about 50%, from 1,536,799 in 2010 to 770,846 in 2016 (see chart, below). Those years also represent the time frame when the ACA took effect. Although courts never ask people to declare why theyre filing, many bankruptcy and legal experts agree that medical bills had been a leading cause of personal bankruptcy before public healthcare coverage expanded under the ACA. Unlike other causes of debt, medical bills are often unexpected, involuntary, and large.

If youre uninsured or underinsured, you can run up a huge debt in a short period of time, says Lois Lupica, a bankruptcy expert and Maine Law Foundation Professor of Law at the University of Maine School of Law.

So did the rise of the ACAwhich helped some 20 million more Americans get health insurancecause the decline in bankruptcies?

The many experts we interviewed also pointed to two other contributing factors: an improving economy and changes to bankruptcy laws in 2005 that made it more difficult and costly to file. However, they almost all agreed that expanded health coverage played a major role in the marked, recent decline.

Some of the most important financial protections of the ACA apply to all consumers, whether they get their coverage through ACA exchanges or the private insurance marketplace. These provisions include mandated coverage for pre-existing conditions and, on most covered benefits, an end to annual and lifetime coverage caps. Aspects of the law, including provisions for young people to be covered by a family policy until age 26, went into effect in 2010 and 2011, before the full rollout of the ACA in 2014.

Its absolutely remarkable, says Jim Molleur, a Maine-based bankruptcy attorney with 20 years of experience. Were not getting people with big medical bills, chronically sick people who would hit those lifetime caps or be denied because of pre-existing conditions. They seemed to disappear almost overnight once ACA kicked in.

The first attempt to repeal and replace the ACA, in March, failed to gain enough Congressional support and never came to a vote.

Then in April, details of a new replacement plan were released. Although President Donald Trump has said that this new version, like the first bill that was pulled from consideration, will cover pre-existing conditions, the revised law gives states broad latitude to allow insurance companies to increase rates for consumers with an existing illness.

Since the start of the year, more than 2,000 consumers have answered an online questionnaire from Consumer Reports advocacy and mobilization team, sharing their experiences with the ACA. Katie Weber of Seattle was one of them.

In 2011, she had just landed her first job out of college, as a teacher with AmeriCorps, she explains in a phone interview. Thats when the unusual numbness in her hand began, which sheand her doctorat first mistook for a pinched nerve. Then came debilitating headaches and nausea and, ultimately, a diagnosis of medulloblastoma, a fast-growing cancerous brain tumor.

The treatment for her tumor was straightforward: surgery, radiation, then chemotherapy. Figuring out how to pay for it was much less clear. She worried that the insurance she had through AmeriCorps wouldnt cover enough of her bills.

My dad said to me, Your health is the most important thing. If you have to declare bankruptcy at age 23, its no big deal, Weber says.

Because of the ACA, she says, it never came to that. After her year with AmeriCorps, the new healthcare law enabled her to get coverage under her parents insurance plan.

The ACA provisions required that the familys insurance company cover her even though she had already been diagnosed with cancer. That would not have been the case before the ACA, which mandates the coverage of pre-existing conditions for all consumers.

Later, when she aged out of her parents insurance, Weber was able to enroll in Apple Health, Washington states version of Medicaid , a program that was expanded once the ACA was passed. That coverage, she says, has been crucial to her financial and medical well-being, especially once the cancer returned last fall.

Weber says she now spends more time discussing treatment options and less time worrying how shell pay for MRIs and drugs. These are covered in full under her Apple Health policy.

Cancer is really expensive, she says. My insurance saved my life.

If you want further testimony about how much personal bankruptcies have dropped over the past decade, talk to Susan Grossberg, a Springfield, Mass., attorney.

For more than 20 years she has helped consumers push the financial reset button when debt triggered by divorce, unemployment, or a costly illness or medical episode became too much to handle. Medical debt can get really big really quickly, Grossberg says. When youre in the emergency room theyre not checking your credit score while theyre caring for you.

With the advent of the ACAand before that, expanded state healthcare in Massachusettsshe says fewer clients with large medical debts walked through her door.

Grossberg adds that her bankruptcy business has slowed so much that she has been forced to take on other kinds of legal worklandlord-tenant and housing discrimination casesto cover her own bills.

The American Bankruptcy Institute suggested that veteran Chicago bankruptcy attorney and trustee David Leibowitz could also help parse the reasons for the decade-long decline.

First, he says, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 made it more difficult for consumers to file for bankruptcy. The law required credit counseling and income verification and forced many consumers to seek protection under Chapter 13, which restructures, but does not eliminate, most debt. The piles of paperwork also meant most filers needed a lawyer, which made bankruptcy more costly and therefore not an option for many poor consumers.

Then there was the economy. After a slow and steady recovery following the housing crisis of 2008, Leibowitz explains that American consumers generally had fewer problems with their mortgages, better employment prospects, and greater access to credit, which made them less likely to file.

The final factor, according to Leibowitz, has been the ACA, which afforded health coverage to many more consumers and expanded protections for all.

Of course, not everyone sees such a direct connection between the decline in bankruptcies and the emergence of the ACA.

Thomas P. Miller, resident fellow at the American Enterprise Institute and co-author of Why ObamaCare is Wrong for America (HarperCollins, 2011), cautioned against reaching broad conclusions because the subject is so complex.

Certainly there are fewer people declaring bankruptcy, and certainly fewer are declaring bankruptcy because of healthcare spending, he says. But his earlier research suggested that some studies exaggerated the degree to which high healthcare bills cause bankruptcies. They tended to reflect other problems with credit card balances well beyond healthcare, he says. It stems from multiple causes.

Over the past decade, determining the cause-and-effect relationship between medical debt and bankruptcy has become a political football, particularly during the years the Obama administration was trying to pass the ACA through Congress.

The truth is that its not that easy to determine how many bankruptcies are caused by medical debt. Examining the paperwork doesnt always offer insight because debtors often juggle their indebtedness, for example, using a credit card to pay an outstanding medical bill while leaving other debts unpaid.

But a 2014 study from Daniel Austin, a bankruptcy attorney and, at the time, a professor at the Northeastern University School of Law, offers some of the most in-depth research to date.

Austin and his team selected a nationwide group of 100 bankruptcy filers meant to represent a cross-section of the U.S. population, studied their paperwork, then followed up with a survey asking filers, basically, Why?

His teams research found that medical debt is the single largest factor in personal bankruptcy. First, Austin analyzed the paperwork of individual case files, which suggested that medical bills were a factor in 18% of filings. But when he directly asked the same filers, in a survey, the number was even higher, with 25% citing medical bills as a factor in their decision to file bankruptcy.

In addition to the nationwide group, Austin isolated a group of 100 bankruptcy filers from Massachusetts. Why Massachusetts? Because its citizens, starting in 2006, had been covered by a comprehensive state healthcare program similar to the ACA known as Romneycare, after the states former governor, Mitt Romney.

The differences between the two groups were striking. Even though the Massachusetts filers owed substantially more in unsecured debt (that is, debt not backed by a home, a car, or another asset) than their counterparts in other states, they reported less than half as much medical debt, which is also unsecured.

The average medical debt in Massachusetts in 2013 was relatively low at just $3,041 (6% of total unsecured debt) compared to $8,594 (20% of total unsecured debt) nationwide, Austin writes in his 2014 study, portions of which were published in the Maine Law Review.

Only about 9% of Massachusetts debtors felt their bankruptcy filing was a result of medical bills, Austin explains. This compares to 25% for debtors from [other] jurisdictions. Austins research found that comprehensive medical coverage in Massachusetts had all but eliminated medical bills as a cause for bankruptcy.

Not only in absolute numbersthey had much smaller medical debtbut psychologically, medical debt did not loom nearly as large for people in Massachusetts as it did for other people in other states. And in 2010, four years after Romneycare began, the state had a bankruptcy rate that was about 30% lower than that of other states.

At its most basic level, health insurance allows consumers to pay for the medical care they need. Each year, the Centers for Disease Control and Prevention determines how well the system is working by surveying Americans and asking a simple but powerful question: Did you have problems paying medical bills in the last 12 months?

The percentage of those reporting problems has dropped from 21.3% of households when they first asked the question in 2011 to 16.2% in 2016. Thats almost 13 million fewer Americans no longer facing collection notices from a doctor or hospital.

Its been happening across the board, by race, by age, by insurance status, by gender, says Robin Cohen, the studys lead author.

But insurance is also about peace of mind. And judging from the consumers who have shared their stories with Consumer Reports, that certainty is in short supply as the fate of the ACA is decided. People are wondering what comes next: Repeal? Replace? Improve? Retain and neglect? No one really knows the answer. Americans are concerned about how the future of healthcare will affect them and their families.

In CRs Consumer Voices survey in January 2017, 55% of consumers said they lacked confidence that they or their loved ones would be able to afford insurance to secure that care.

Don Shope of Ocean View, Del., said the availability of ACA coverage gave him the confidence to leave a corporate job and start his own consulting business. But now, with the ACAs future in limbo, he and his wife are watching the action in Washington and worrying that they might have to return to jobs with benefits.

Im not a liberal or a conservative, a Democrat or a Republican, Shope said in a phone interview. Our biggest concern is that with repeal and replace were going to be left high and dry.

He also believes in expanded health coverage for all. If any American is sick, we should be willing to take care of them, Shope says. Its the right thing to do. Economics and profit shouldnt be part of the healthcare equation.

And then theres Kristin Couch, who has channeled the uncertainty into her own brand of activism.

I was kind of anxious, Couch says about the day in March when Congress was set to vote on a less robust bill that would replace the ACA.

The 31-year-old public relations executive, of Gainesville, Ga., has started to follow health-care politics in the intense, almost obsessive way some people follow sports. The morning after Election Day, she called the offices of her local congressional representatives, urging them to preserve the protections the ACA offers.

Couch began caring about healthcare as a high school senior when she was diagnosed with lupus and since then has become something of a reluctant expert on how to manage not only her treatment but also the insurance that pays for it.

With friends and neighbors she talks about the law in simple but personal terms. I tell people, I have a pre-existing condition, and this has helped me, she says of the ACA. Couch follows the healthcare debate in Washington so closely because she knows firsthand what happens when you dont have adequate coverage.

Couch remembers the time, before the ACA, when a new immunosuppressive drug that wasnt covered by her policy became available. It was expensive, she explained in an interview, but it worked, and I knew I needed it. Every month Id just put it on a credit card. When your medication is thousands of dollars a month, thats the start of being in debt. She considered bankruptcy but ultimately worked her way out from under the pile of medical bills.

As a result of the ACA, her coverage shifted again when her employer no longer offered a traditional plan and she had to switch to one with a high $3,000 deductible. Initially she was stunned by her out-of-pocket costs, but she quickly realized that her total costs would be capped once shed met that threshold.

It seemed scary and it seemed different, she explains. But it actually saved me money. And now, she says, I dont have to worry about how much a new drug costs.

So on the March day the House of Representatives was supposed to vote on repealing the ACA, she worried that the insurance shed come to depend on was about to be yanked away. Only after emerging from a client meeting did she learn the vote had been canceled. I started crying I was so happy, Couch recalls. Its like a weight has lifted.

But Couchs relief was short-lived. Now shes back to paying close attention to the rhetoric and vote-counting deals in Washington, awaiting another possible vote on the newly revised plan. I'm still optimistic, she said this week. I think enough people will stand up and fight for the coverage.

Consumer Reports has no relationship with any advertisers on this website. This article originally appeared on Consumer Reports .

Here is the original post:

How Obamacare Helped Slash Personal Bankruptcy by 50% - Money Magazine

Almost 100 years after it incorporated, Joliet-based Central Grocers filed for Chapter 11 bankruptcy as it continues to work toward a sale of its Strack & Van Til stores, the company announced Thursday.

Central Grocers is a grocery cooperative that has long operated as wholesaler for more than 400 independent grocery stores in the Chicago area, distributing private-label Centrella products as well as produce, meat and dairy. It's also the parent company of Strack & Van Til and Ultra Foods stores in Illinois and Indiana, which will be included in the bankruptcy filing. Last month, Central Grocers announced plans to sell 22 Strack & Van Til stores while closing nine "underperforming" Ultra stores.

The company said in a news release Thursday that it also intends to sell its vast warehouse in Joliet.

"In light of the increasingly difficult environment for independent supermarkets and retailers, we have been working tirelessly to achieve an outcome that is in the best interests of our stakeholders. We are using this court-supervised sale process to provide us the time and flexibility to conduct an orderly sale of the Strack & Van Til stores, while we work to sell the warehouse in Joliet and wind down our wholesale distribution operations," CEO Ken Nemeth said in the news release.

More to come.

gtrotter@chicagotribune.com

Twitter @GregTrotterTrib

Read the rest here:

Central Grocers files for bankruptcy, will sell Joliet warehouse - Chicago Tribune

ArgentinaEdit

In Argentina the national Act "24.522 de Concursos y Quiebras" regulates the Bankruptcy and the Reorganization of the individuals and companies, public entities are not included.

In Australia, bankruptcy is a status which applies to individuals and is governed by the federal Bankruptcy Act 1966.[13] Companies do not go bankrupt but rather go into liquidation or administration, which is governed by the federal Corporations Act 2001.[14]

If a person commits an act of bankruptcy, then a creditor can apply to the Federal Circuit Court or the Federal Court for a sequestration order.[15] Acts of bankruptcy are defined in the legislation, and include the failure to comply with a bankruptcy notice.[16] A bankruptcy notice can be issued where, among other cases, a person fails to pay a judgment debt.[17] A person can also seek to have himself or herself declared bankrupt by lodging a debtor's petition with the "Official Receiver",[18] which is the Australian Financial Security Authority (AFSA).[19]

To declare bankruptcy or for a creditors petition to be lodged, the debt owed must be at least $5,000.[17]

All bankrupts are required to lodge a Statement of Affairs document with AFSA, which includes important information about their assets and liabilities. A bankruptcy cannot be annulled until this document has been lodged.

Ordinarily, a bankruptcy lasts three years from the filing of the Statement of Affairs with AFSA.[20]

A Bankruptcy Trustee (in most cases, the Official Receiver) is appointed to deal with all matters regarding the administration of the bankrupt estate. The Trustee's job includes notifying creditors of the estate and dealing with creditor inquiries; ensuring that the bankrupt complies with his or her obligations under the Bankruptcy Act; investigating the bankrupt's financial affairs; realising funds to which the estate is entitled under the Bankruptcy Act and distributing dividends to creditors if sufficient funds become available.

For the duration of their bankruptcy, all bankrupts have certain restrictions placed upon them. For example, a bankrupt must obtain the permission of his or her trustee to travel overseas. Failure to do so may result in the bankrupt being stopped at the airport by the Australian Federal Police. Additionally, a bankrupt is required to provide his or her trustee with details of income and assets. If the bankrupt does not comply with the Trustee's request to provide details of income, the trustee may have grounds to lodge an Objection to Discharge, which has the effect of extending the bankruptcy for a further five years.

The realisation of funds usually comes from two main sources: the bankrupt's assets and the bankrupt's wages. There are certain assets that are protected, referred to as "protected assets". These include household furniture and appliances, tools of the trade and vehicles up to a certain value. All other assets of value will be sold. If a house or car is above a certain value, the bankrupt can buy the interest back from the estate in order to keep the asset. If the bankrupt does not do this, the interest vests in the estate and the trustee is able to take possession of the asset and sell it.

The bankrupt will have to pay income contributions if his or her income is above a certain threshold. If the bankrupt fails to pay, the trustee can issue a notice to garnishee the bankrupt's wages. If that is not possible, the Trustee may seek to extend the bankruptcy for a further five years.

Bankruptcies can be annulled prior to the expiration of the normal three-year period if all debts are paid out in full. Sometimes a bankrupt may be able to raise enough funds to make an Offer of Composition to creditors, which would have the effect of paying the creditors some of the money they are owed. If the creditors accept the offer, the bankruptcy can be annulled after the funds are received.

After the bankruptcy is annulled or the bankrupt has been automatically discharged, the bankrupt's credit report status will be shown as "discharged bankrupt" for some years. The maximum number of years this information can be held is subject to the retention limits under the Privacy Act. How long such information will be present on a credit report may be less depending on the company issuing the report, but the report must cease to record that information based on the criteria in the Privacy Act.

In Brazil, the Bankruptcy Law (11.101/05) governs court-ordered or out-of-court receivership and bankruptcy and only applies to public companies (publicly traded companies) with the exception of financial institutions, credit cooperatives, consortia, supplementary scheme entities, companies administering health care plans, equity companies and a few other legal entities. It does not apply to state-run companies.

Current law covers three legal proceedings. The first one is bankruptcy itself ("Falncia"). Bankruptcy is a court-ordered liquidation procedure for an insolvent business. The final goal of bankruptcy is to liquidate company assets and pay its creditors.

The second one is Court-ordered Restructuring (Recuperao Judicial). The goal is to overcome the business crisis situation of the debtor in order to allow the continuation of the producer, the employment of workers and the interests of creditors, leading, thus, to preserving company, its corporate function and develop economic activity. It's a court procedure required by the debtor which has been in business for more than two years and requires approval by a judge.

The Extrajudicial Restructuring (Recuperao Extrajudicial) is a private negotiation that involves creditors and debtors and, as with court-ordered restructuring, also has to be approved by courts.[21]

Bankruptcy, also referred to as insolvency in Canada, is governed by the Bankruptcy and Insolvency Act and is applicable to businesses and individuals, for example, Target Canada, the Canadian subsidiary of the Target Corporation, the second-largest discount retailer in the United States filed for bankruptcy in January 15, 2015, and closed all of its stores by April 12. The office of the Superintendent of Bankruptcy, a federal agency, is responsible for overseeing that bankruptcies are administered in a fair and orderly manner by all licensed Trustees in Canada.

Trustees in bankruptcy, 1041 individuals licensed to administer insolvencies, bankruptcy and proposal estates and are governed by the Bankruptcy and Insolvency Act of Canada.

Bankruptcy is filed when a person or a company becomes insolvent and cannot pay their debts as they become due and if they have at least $1,000 in debt.

In 2011, the Superintendent of bankruptcy reported that trustees in Canada filed 127,774 insolvent estates. Consumer estates were the vast majority, with 122 999 estates.[22] The consumer portion of the 2011 volume is divided into 77,993 bankruptcies and 45,006 consumer proposals. This represented a reduction of 8.9% from 2010. Commercial estates filed by Canadian trustees in 2011 4,775 estates, 3,643 bankruptcies and 1,132 Division 1 proposals.[23] This represents a reduction of 8.6% over 2010.

Some of the duties of the trustee in bankruptcy are to:

Creditors become involved by attending creditors' meetings. The trustee calls the first meeting of creditors for the following purposes:

In Canada, a person can file a consumer proposal as an alternative to bankruptcy. A consumer proposal is a negotiated settlement between a debtor and their creditors.

A typical proposal would involve a debtor making monthly payments for a maximum of five years, with the funds distributed to their creditors. Even though most proposals call for payments of less than the full amount of the debt owing, in most cases, the creditors will accept the deal, because if they do not, the next alternative may be personal bankruptcy, where the creditors will get even less money. The creditors have 45 days to accept or reject the consumer proposal. Once the proposal is accepted by both the creditors and the Court, the debtor makes the payments to the Proposal Administrator each month (or as otherwise stipulated in their proposal), and the general creditors are prevented from taking any further legal or collection action. If the proposal is rejected, the debtor is returned to his prior insolvent state and may have no alternative but to declare personal bankruptcy.

A consumer proposal can only be made by a debtor with debts to a maximum of $250,000 (not including the mortgage on their principal residence). If debts are greater than $250,000, the proposal must be filed under Division 1 of Part III of the Bankruptcy and Insolvency Act. An Administrator is required in the Consumer Proposal, and a Trustee in the Division I Proposal (these are virtually the same although the terms are not interchangeable). A Proposal Administrator is almost always a licensed trustee in bankruptcy, although the Superintendent of Bankruptcy may appoint other people to serve as administrators.

In 2006, there were 98,450 personal insolvency filings in Canada: 79,218 bankruptcies and 19,232 consumer proposals.[24]

The People's Republic of China legalized bankruptcy in 1986, and a revised law that was more expansive and complete was enacted in 2007.

Bankruptcy in Ireland applies only to natural persons. Other insolvency processes including liquidation and examinership are used to deal with corporate insolvency.

Irish bankruptcy law has been the subject of significant comment, from both government sources and the media, as being in need of reform. Part 7 of the Civil Law (Miscellaneous Provisions) Act 2011[25] has started this process and the government has committed to further reform.

The Parliament of India in the first week of May 2016 passed Insolvency and Bankruptcy Code 2016 (New Code). Earlier a clear law on corporate bankruptcy did not exist, even though individual bankruptcy laws have been in existence since 1874. The earlier law in force was enacted in 1920 called the Provincial Insolvency Act.

The legal definitions of the terms bankruptcy, insolvency, liquidation and dissolution are contested in the Indian legal system. There is no regulation or statute legislated upon bankruptcy which denotes a condition of inability to meet a demand of a creditor as is common in many other jurisdictions.

Winding up of companies was in the jurisdiction of the courts which can take a decade even after the company has actually been declared insolvent. On the other hand, supervisory restructuring at the behest of the Board of Industrial and Financial Reconstruction is generally undertaken using receivership by a public entity.

Dutch bankruptcy law is governed by the Dutch Bankruptcy Code (Faillissementswet). The code covers three separate legal proceedings.

Federal Law No. 127-FZ "On Insolvency (Bankruptcy)" dated 26 October 2002 (as amended) (the "Bankruptcy Act"), replacing the previous law in 1998, to better address the above problems and a broader failure of the action. Russian insolvency law is intended for a wide range of borrowers: individuals and companies of all sizes, with the exception of state-owned enterprises, government agencies, political parties and religious organizations. There are also special rules for insurance companies, professional participants of the securities market, agricultural organizations and other special laws for financial institutions and companies in the natural monopolies in the energy industry. Federal Law No. 40-FZ "On Insolvency (Bankruptcy)" dated 25 February 1999 (as amended) (the "Insolvency Law of Credit Institutions") contains special provisions in relation to the opening of insolvency proceedings in relation to the credit company. Insolvency Provisions Act, credit organizations used in conjunction with the provisions of the Bankruptcy Act.

Bankruptcy law provides for the following stages of insolvency proceedings: Monitoring procedure (nablyudeniye); The economic recovery (finansovoe ozdorovleniye); External control (vneshneye upravleniye); Liquidation (konkursnoye proizvodstvo) and Amicable Agreement (mirovoye soglasheniye).

The main face of the bankruptcy process is the insolvency officer (trustee in bankruptcy, bankruptcy manager). At various stages of bankruptcy, he has to be determined: the temporary officer in Monitoring procedure, external manager in External control, the receiver or administrative officer in The economic recovery, the liquidator. During the bankruptcy trustee in bankruptcy (insolvency officer) has a decisive influence on the movement of assets (property) of the debtor - the debtor and has a key influence on the economic and legal aspects of its operations.

Under Swiss law, bankruptcy can be a consequence of insolvency. It is a court-ordered form of debt enforcement proceedings that applies, in general, to registered commercial entities only. In a bankruptcy, all assets of the debtor are liquidated under the administration of the creditors, although the law provides for debt restructuring options similar to those under Chapter 11 of the U.S. Bankruptcy code.

In Sweden, bankruptcy (Swedish: konkurs) is a formal process that may involve a company or individual. It is not the same as insolvency, which is inability to pay debts that should have been paid. A creditor or the company itself can apply for bankruptcy. An external bankruptcy manager will take over the company or the assets of the person, trying to sell as much as possible. A person or a company in bankruptcy can not access its assets (with some exceptions).

The formal bankruptcy process is rarely carried out for individuals.[26] Creditors can claim money through the Enforcement Administration anyway, and creditors do not usually benefit from the bankruptcy of individuals because there are costs of a bankruptcy manager which has priority. Unpaid debts remain after bankruptcy for individuals. People who are deeply in debt can obtain a debt arrangement procedure (Swedish: skuldsanering). On application, they obtain a payment plan under which they pay as much as they can for five years, and then all remaining debts are cancelled. Debts that are derived from being subjected to a ban on business operations (issued by court, commonly for tax fraud and/or fraudulent business practices) or owed to a crime victim as compensation for damages, are exempted from this and like before this process was introduced in 2006 will remain lifelong.[27] Debts that have not been claimed during a 3-10 year period will be cancelled. Often crime victims stop their claims after a few years since criminals often do not have job incomes and might be hard to locate, while banks make sure the claims are not cancelled. The most common reasons for personal insolvency in Sweden are illness, unemployment, divorce or company bankruptcy.

Bankruptcy in the United Kingdom (in a strict legal sense) relates only to individuals (including sole proprietors) and partnerships. Companies and other corporations enter into differently named legal insolvency procedures: liquidation and administration (administration order and administrative receivership). However, the term 'bankruptcy' is often used when referring to companies in the media and in general conversation. Bankruptcy in Scotland is referred to as sequestration. To apply for bankruptcy in Scotland, an individual must have more than 1500 of debt.

A trustee in bankruptcy must be either an Official Receiver (a civil servant) or a licensed insolvency practitioner. Current law in England and Wales derives in large part from the Insolvency Act 1986. Following the introduction of the Enterprise Act 2002, a UK bankruptcy will now normally last no longer than 12 months and may be less, if the Official Receiver files in court a certificate that his investigations are complete. It was expected that the UK Government's liberalisation of the UK bankruptcy regime would increase the number of bankruptcy cases; initially cases increased, as the Insolvency Service statistics appear to bear out. Since 2009, the introduction of the Debt Relief Order has resulted in a dramatic fall in bankruptcies, the latest estimates for year 2014/15 being significantly less than 30,000 cases.

The UK bankruptcy law was changed in May 2000, effective May 29, 2000.[28] Debtors may now retain occupational pensions while in bankruptcy, except in rare cases.[28]

The Government have updated legislation (2016) to streamline the application process for UK bankruptcy. UK residents now need to apply online for bankruptcy - there is an upront fee of 655. The process for residents of Northern Ireland differs - applicants must follow the older process of applying through the courts.[29]

Bankruptcy in the United States is a matter placed under federal jurisdiction by the United States Constitution (in Article 1, Section 8, Clause 4), which empowers Congress to enact "uniform Laws on the subject of Bankruptcies throughout the United States". The Congress has enacted statutes governing bankruptcy, primarily in the form of the Bankruptcy Code, located at Title 11 of the United States Code. Federal law is amplified by state law in some places where Federal law fails to speak or expressly defers to state law.

While bankruptcy cases are always filed in United States Bankruptcy Court (an adjunct to the U.S. District Courts), bankruptcy cases, particularly with respect to the validity of claims and exemptions, are often dependent upon State law. One example: two states, Maryland and Virginia, which are adjoining states, have different personal exemption amounts that cannot be seized for payment of debts. This amount is the first $6,000 in property or cash in Maryland, but only the first $5,000 in Virginia. State law therefore plays a major role in many bankruptcy cases, and it is often not possible to generalize bankruptcy law across state lines.

Generally, a debtor declares bankruptcy to obtain relief from debt, and this is accomplished either through a discharge of the debt or through a restructuring of the debt. Generally, when a debtor files a voluntary petition, his or her bankruptcy case commences.

There are six types of bankruptcy under the Bankruptcy Code, located at Title 11 of the United States Code:

The most common types of personal bankruptcy for individuals are Chapter 7 and Chapter 13. Whether a person qualifies for Chapter 7 or Chapter 13 is in part determined by income.[30] As much as 65% of all U.S. consumer bankruptcy filings are Chapter 7 cases. Corporations and other business forms file under Chapters 7 or 11. Often called "straight bankruptcy" or "simple bankruptcy," it allows consumers to eliminate just about all of their debts over a period of three or four months. Typically, the only debts that survive a Chapter 7 are student loans, child support obligations, some tax bills and criminal fines. Credit cards, pay day loans, personal loans, medical bills, and just about all other bills are discharged.

Ninety-one percent of U.S. individuals who enter bankruptcy hire an attorney to file their Chapter 7 petitions.[31] The typical cost of an attorney is $1,170.00.[31] Alternatives to filing with an attorney are: filing pro se (that is, without an attorney, which requires an individual to fill out at least sixteen separate forms),[32] hiring a non-lawyer petition preparer,[33] or using online software to generate the petition.

In Chapter 7, a debtor surrenders his or her non-exempt property to a bankruptcy trustee who then liquidates the property and distributes the proceeds to the debtor's unsecured creditors. In exchange, the debtor is entitled to a discharge of some debt; however, the debtor will not be granted a discharge if he or she is guilty of certain types of inappropriate behavior (e.g., concealing records relating to financial condition) and certain debts (e.g., spousal and child support and most student loans). Some taxes will not be discharged even though the debtor is generally discharged from his or her debt. Many individuals in financial distress own only exempt property (e.g., clothes, household goods, an older car, or the tools of their trade or profession) and will not have to surrender any property to the trustee.[34] The amount of property that a debtor may exempt varies from state to state (as noted above, Virginia and Maryland have a $1,000 difference.) Chapter 7 relief is available only once in any eight-year period. Generally, the rights of secured creditors to their collateral continues even though their debt is discharged. For example, absent some arrangement by a debtor to surrender a car or "reaffirm" a debt, the creditor with a security interest in the debtor's car may repossess the car even if the debt to the creditor is discharged.

The 2005 amendments to the Bankruptcy Code introduced the "means test" for eligibility for chapter 7. An individual who fails the means test will have his or her chapter 7 case dismissed or may have to convert his or her case to a case under chapter 13.

Generally, a trustee will sell most of the debtor's assets to pay off creditors. However, certain assets of the debtor are protected to some extent. For example, Social Security payments, unemployment compensation, and limited values of equity in a home, car, or truck, household goods and appliances, trade tools, and books are protected. However, these exemptions vary from state to state.

In Chapter 13, the debtor retains ownership and possession of all of his or her assets, but must devote some portion of his or her future income to repaying creditors, generally over a period of three to five years. The amount of payment and the period of the repayment plan depend upon a variety of factors, including the value of the debtor's property and the amount of a debtor's income and expenses. Secured creditors may be entitled to greater payment than unsecured creditors.[35]

Relief under Chapter 13 is available only to individuals with regular income whose debts do not exceed prescribed limits. If the debtor is an individual or a sole proprietor, the debtor is allowed to file for a Chapter 13 bankruptcy to repay all or part of the debts. Under this chapter, the debtor can propose a repayment plan in which to pay creditors over three to five years. If the monthly income is less than the state's median income, the plan will be for three years unless the court finds "just cause" to extend the plan for a longer period. If the debtor's monthly income is greater than the median income for individuals in the debtor's state, the plan must generally be for five years. A plan cannot exceed the five-year limitation.

In contrast to Chapter 7, the debtor in Chapter 13 may keep all of his or her property, whether or not exempt. If the plan appears feasible and if the debtor complies with all the other requirements, the bankruptcy court will typically confirm the plan and the debtor and creditors will be bound by its terms. Creditors have no say in the formulation of the plan other than to object to the plan, if appropriate, on the grounds that it does not comply with one of the Code's statutory requirements. Generally, the payments are made to a trustee who in turn disburses the funds in accordance with the terms of the confirmed plan.

When the debtor completes payments pursuant to the terms of the plan, the court will formally grant the debtor a discharge of the debts provided for in the plan. However, if the debtor fails to make the agreed upon payments or fails to seek or gain court approval of a modified plan, a bankruptcy court will often dismiss the case on the motion of the trustee. Pursuant to the dismissal, creditors will typically resume pursuit of state law remedies to the extent a debt remains unpaid.

In Chapter 11, the debtor retains ownership and control of assets and is re-termed a debtor in possession (DIP). The debtor in possession runs the day-to-day operations of the business while creditors and the debtor work with the Bankruptcy Court in order to negotiate and complete a plan. Upon meeting certain requirements (e.g., fairness among creditors, priority of certain creditors) creditors are permitted to vote on the proposed plan. If a plan is confirmed the debtor will continue to operate and pay its debts under the terms of the confirmed plan. If a specified majority of creditors do not vote to confirm a plan, additional requirements may be imposed by the court in order to confirm the plan. Debtors filing for Chapter 11 protection a second time are known informally as "Chapter 22" filers.[36]

Chapter 7 and Chapter 13 are the efficient bankruptcy chapters often used by most individuals. The chapters which almost always apply to consumer debtors are chapter 7, known as a "straight bankruptcy", and chapter 13, which involves an affordable plan of repayment. An important feature applicable to all types of bankruptcy filings is the automatic stay. The automatic stay means that the mere request for bankruptcy protection automatically halts most lawsuits, repossessions, foreclosures, evictions, garnishments, attachments, utility shut-offs, and debt collection activity.

A Bankruptcy Exemption defines the property a debtor may retain and preserve through bankruptcy. Certain real and personal property can be exempted on "Schedule C"[37] of a debtor's bankruptcy forms, and effectively be taken outside the debtor's bankruptcy estate. Bankruptcy Exemptions are available only to individuals filing bankruptcy.[38] There are two alternative systems that can be used to "exempt" property from a bankruptcy estate, Federal Exemptions[39] (available in some states but not all), and State Exemptions (which vary widely between states).

Individuals filing bankruptcy that claim exemptions must have all exemptions agreed upon by their bankruptcy judge (and/or courts) and by their creditors. This step usually requires the help of lawyers, in which the sector of Bankruptcy Law has grown to become a large section of the law field. That said, new software providers are beginning to develop products letting consumers operate without an attorney.[40] This sector, the combination of law and finance, has attracted a large number of students in recent years, and has been given a large undertaking for growing the law sector.

The Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005, Pub. L. No. 109-8, 119 Stat. 23 (April 20, 2005) ("BAPCPA"), substantially amended the Bankruptcy Code. Many provisions of BAPCPA were forcefully advocated by consumer lenders and were just as forcefully opposed by many consumer advocates, bankruptcy academics, bankruptcy judges, and bankruptcy lawyers.[41] The enactment of BAPCPA followed nearly eight years of debate in Congress. According to the book, The Unwinding, Joe Biden, Chris Dodd, and Hillary Clinton helped pass this bill.[42] Most of the law's provisions became effective on October 17, 2005. Upon signing the bill, President Bush stated:

Under the new law, Americans who have the ability to pay will be required to pay back at least a portion of their debts. Those who fall behind their state's median income will not be required to pay back their debts. The new law will also make it more difficult for serial filers to abuse the most generous bankruptcy protections. Debtors seeking to erase all debts will now have to wait eight years from their last bankruptcy before they can file again. The law will also allow us to clamp down on bankruptcy mills that make their money by advising abusers on how to game the system.

Advocates of BAPCPA claimed that its passage would reduce losses to creditors such as credit card companies, and that those creditors would then pass on the savings to other borrowers in the form of lower interest rates. Critics have argued that these claims turned out to be false. After BAPCPA passed, although credit card company losses decreased, prices charged to customers increased, and credit card company profits soared.[44]

Among its many changes to consumer bankruptcy law, BAPCPA includes a "means test",[45] which was intended to make it more difficult for a significant number of financially distressed individual debtors whose debts are primarily consumer debts to qualify for relief under Chapter 7 of the Bankruptcy Code. The "means test" is employed in cases where an individual with primarily consumer debts has more than the average annual income for a household of equivalent size, computed over a 180-day period prior to filing. If the individual must "take" the "means test", their average monthly income over this 180-day period is reduced by a series of allowances for living expenses and secured debt payments in a very complex calculation that may or may not accurately reflect that individual's actual monthly budget. If the results of the means test show no disposable income (or in some cases a very small amount) then the individual qualifies for Chapter 7 relief. If a debtor does not qualify for relief under Chapter 7 of the Bankruptcy Code, either because of the Means Test or because Chapter 7 does not provide a permanent solution to delinquent payments for secured debts, such as mortgages or vehicle loans, the debtor may still seek relief under Chapter 13 of the Code. A Chapter 13 plan often does not require repayment to general unsecured debts, such as credit cards or medical bills.

BAPCPA also requires individuals seeking bankruptcy relief to undertake credit counselling with approved counseling agencies prior to filing a bankruptcy petition and to undertake education in personal financial management from approved agencies prior to being granted a discharge of debts under either Chapter 7 or Chapter 13. Some studies of the operation of the credit counseling requirement suggest that it provides little benefit to debtors who receive the counseling because the only realistic option for many is to seek relief under the Bankruptcy Code.[46]

During 2004, the number of insolvencies reached all time highs in many European countries. In France, company insolvencies rose by more than 4%, in Austria by more than 10%, and in Greece by more than 20%. The increase in the number of insolvencies, however, does not indicate the total financial impact of insolvencies in each country because there is no indication of the size of each case. An increase in the number of bankruptcy cases does not necessarily entail an increase in bad debt write-off rates for the economy as a whole.

Bankruptcy statistics are also a trailing indicator. There is a time delay between financial difficulties and bankruptcy. In most cases, several months or even years pass between the financial problems and the start of bankruptcy proceedings. Legal, tax, and cultural issues may further distort bankruptcy figures, especially when comparing on an international basis. Two examples:

The insolvency numbers for private individuals also do not show the whole picture. Only a fraction of heavily indebted households will decide to file for insolvency. Two of the main reasons for this are the stigma of declaring themselves insolvent and the potential business disadvantage.

Following the soar in insolvencies in the last decade, a number of European countries, such as France, Germany, Spain and Italy, began to revamp their bankruptcy laws in 2013. They modelled these new laws after the image of Chapter 11 of the U.S. Bankruptcy Code. Currently, the majority of insolvency cases have ended in liquidation in Europe rather than the businesses surviving the crisis. These new law models are meant to change this; lawmakers are hoping to turn bankruptcy into a chance for restructuring rather than a death sentence for the companies.[47]

Read the original here:

Bankruptcy - Wikipedia

About Bankruptcy

Filing bankruptcy can help a person by discarding debt or making a plan to repay debts. A bankruptcy case normally begins when the debtor files a petition with the bankruptcy court. A petition may be filed by an individual, by spouses together, or by a corporation or other entity.

All bankruptcy cases are handled in federal courts under rules outlined in the U.S. Bankruptcy Code.

There are different types of bankruptcies, which are usually referred to by their chapter in the U.S. Bankruptcy Code.

Bankruptcy Basics provides detailed information about filing.

Seeking the advice of a qualified lawyer is strongly recommended because bankruptcy has long-term financial and legal consequences. Individuals can file bankruptcy without a lawyer, which is called filing pro se. Learn more.

Use the forms that are numbered in the 100 series to file bankruptcy for individuals or married couples. Use the forms that are numbered in the 200 series if you are preparing a bankruptcy on behalf of a nonindividual, such as a corporation, partnership, or limited liability company (LLC). Sole proprietors must use the forms that are numbered in the 100 series.

If you need help finding a bankruptcy lawyer, the resources below may help. If you are unable to afford an attorney, you may qualify for free legal services.

Read the rest here:

Bankruptcy | United States Courts

You did everything you could to avoid it. You cut back on spending. You sold stuff to make payments. Youve been eating peanut butter and jelly. But even with all the work, youve come to one painful conclusionyou may need to file bankruptcy.

There are some things you need to know before you take that first step. We want to help you find those answers.

Related: If you need help right now, contact one of our financial coaches.

The money class that will change your life!

When you file for bankruptcy, youre telling the court that you cannot pay your debts. Its a process set up through federal laws. It cancels many of your debts so you can get a fresh start. However, it also allows creditors (people you owe money to) to get a share of any money the courts require you to pack back.

When you file for bankruptcy, creditors have to stop any effort to collect money from you, at least temporarily. Most creditors cant write, call or sue you after youve filed. Bankruptcy can also stop foreclosure on your home, repossession of property, or garnishment of your wages.

There are two main types of bankruptcy for consumers. Youve probably heard of them:

Youve probably heard of other types of bankruptcy, like Chapter 11. Its typically reserved for business. You may also hear of Chapter 12 bankruptcy, which is for farmers and fishermen.

For specific information about bankruptcy laws in your area, visit the United States Courts website. There youll find information on the process and where to find help in your area. There is a bankruptcy court for each judicial district in the US90 districts in all.

Filing for bankruptcy is a big deal, so you dont want go in blind. Here are some things you need to do before you take any action:

If your family decides to file bankruptcy, well be here to help you during the process and give you the tools to restore your hope after your bankruptcy is discharged. Well never get angry with someone for filing bankruptcy. Its a difficult, emotional situation. We get that.

If you havent filed yet, we have coaches available to meet with you and work with you to find a better option than filing if at all possible.

Our ultimate goal is to help you find financial peace and change your family tree. Bankruptcy is a setback, sure. But your situation, no matter how bad, is never hopeless.

Let us help.

Learn more about our financial coaches and the services they provide.

The money class that will change your life!

See the original post:

The Truth About Bankruptcy | DaveRamsey.com

If you plan to file for bankruptcy protection, you must get credit counseling from a government-approved organization within 180 days before you file. You also have to complete a debtor education course before your debts can be discharged.

The Department of Justices U.S. Trustee Program approves organizations to provide the credit counseling and debtor education required for anyone filing for personal bankrutpcy. Only the counselors and educators that appear on the U.S. Trustee Programs lists can advertise that they are approved to provide the required counseling and debtor education. By law, the U.S. Trustee Program does not operate in Alabama and North Carolina; in these states, court officials called Bankruptcy Administrators approve pre-bankruptcy credit counseling organizations and pre-discharge debtor education course providers.

Pre-bankruptcy credit counseling and pre-discharge debtor education may not be provided at the same time. Credit counseling must take place before you file for bankruptcy; debtor education must take place after you file.

You must file a certificate of credit counseling completion when you file for bankruptcy, and evidence of completion of debtor education after you file for bankruptcy but before your debts are discharged. Only credit counseling organizations and debtor education course providers that have been approved by the U.S. Trustee Program may issue these certificates. To protect against fraud, the certificates are numbered, and produced through a central automated system.

A pre-bankruptcy counseling session with an approved credit counseling organization should include an evaluation of your personal financial situation, a discussion of alternatives to bankruptcy, and a personal budget plan. A typical counseling session should last about 60 to 90 minutes, and can take place in person, on the phone, or online. The counseling organization is required to provide the counseling for free for people who cant afford to pay. If you cant afford to pay a fee for credit counseling, ask for a fee waiver from the counseling organization before the session begins. Otherwise, you may be charged a fee for the counseling. It will generally is about $50, depending on where you live, and the types of services you receive, among other factors. The counseling organization must discuss any fees with you before you start the counseling session.

Once you complete the required counseling, you must get a certificate as proof. Check the U.S. Trustees website to be sure that you receive the certificate from a counseling organization that is approved in the judicial district where you are filing bankruptcy. Credit counseling organizations may not charge an extra fee for the certificate.

A debtor education course by an approved provider should include information on developing a budget, managing money, and using credit wisely. Like pre-filing counseling, debtor education can take place in person, on the phone, or online. The education session might last longer than the pre-filing counseling about two hours and the fee is between $50 and $100. As with pre-filing counseling, if you cant afford the session fee, ask the debtor education provider to waive it. Check the list of approved debtor education providers online or at the bankruptcy clerks office in your district.

Once you have completed the required debtor education course, you should receive a certificate as proof. This certificate is separate from the certificate you received after completing your pre-filing credit counseling. Check the U.S. Trustees website to be sure that you receive the certificate from a debtor education provider that is approved in the judicial district where you filed for bankruptcy. Unless the debtor education provider told you theres a fee for the certificate before the education session begins, you cant be charged an extra fee for it.

If youre looking for credit counseling to fulfill the bankruptcy law requirements, make sure you receive services only from approved providers for your judicial district. Check the list of approved credit counseling providers online or at the bankruptcy clerks office for the district where you will file. Once you have the list of approved organizations, call several to gather information before you pick one. Some key questions to ask are:

The U.S. Trustee Program promotes integrity and efficiency in the nations bankruptcy system by enforcing bankruptcy laws and oversees private trustees. The Program has 21 regions and 95 field offices, and oversees the administration of bankruptcy in all states except Alabama and North Carolina. For more information, visit the U.S. Trustee Program.

If you have concerns about approved credit counseling agencies or debtor education course providers, contact the U.S. Trustee Program by email at USTCCDEComplaintHelp@usdoj.gov, or send a letter to Executive Office for U.S. Trustees, Credit Counseling and Debtor Education Unit, 20 Massachusetts Avenue, N.W., Suite 8000, Washington, D.C., 20530. Include as much detail as you can, including the name of the credit counseling organization or debtor education course provider, the date of contact, and who you talked to.

Read the original here:

Filing for Bankruptcy: What to Know | Consumer Information

Bankruptcy Basics is a publication of the Administrative Office of the U.S. Courts. It provides basic information to debtors, creditors, court personnel, the media, and the general public on different aspects of federal bankruptcy laws. It also provides individuals who may be considering bankruptcy with a basic explanation of the different chapters under which a bankruptcy case may be filed and answers some of the most commonly asked questions about the bankruptcy process.

Bankruptcy Basics (pdf) For cases filed before October 17, 2005

Bankruptcy Basics (pdf) For cases filed on or after October 17, 2005

Bankruptcy Basics is not a substitute for the advice of competent legal counsel or a financial expert, nor is it a step-by-step guide for filing for bankruptcy. The Administrative Office of the United States Courts cannot provide legal or financial advice. Such advice may be obtained from a competent attorney, accountant, or financial adviser.

November 2011 Third Edition

While the information presented is accurate as of the date of publication, it should not be cited or relied upon as legal authority. It should not be used as a substitute for reference to the United States Bankruptcy Code (title 11, United States Code) and the Federal Rules of Bankruptcy Procedure, both of which may be reviewed at local law libraries, or to local rules of practice adopted by each bankruptcy court. Finally, this publication should not substitute for the advice of competent legal counsel.

Read the rest here:

Bankruptcy Basics | United States Courts

The Affordable Care Act was among the likely factors that assisted with a big decrease nearly 50% in personal bankruptcy filings in the last six years, according to a Consumer Reports analysis.

Other factors, including new bankruptcy laws, a rebounding economy and tighter credit requirements, also likely helped with the reduction, with filings dropping from 1.54 million in 2010 to 770,846 last year.

Theres no way to know what made the biggest difference in that drop, since those filing for personal bankruptcy dont state a specific reason for it.

Personal bankruptcies actually began to decrease before the ACA, also called Obamacare, began to be implemented, though some parts including expanding family health plans to young adults started in 2010.

Read: This expensive risk lurks in nearly every medical experience you have

Still, the health care law in all likelihood played a major role. The ACA reduced uninsured rates to historic lows, with a major portion of that expanded insurance coverage for low-income Americans.

See: Forget iPhones many Americans cant pay a $100 medical bill

The laws consumer protections include health insurance for those with pre-existing conditions, reduced premiums for older people and an end to health insurers capping annual or lifetime benefits.

The ACA also subsidized individual health plans for many low and middle-income individuals. Richard Gaudreau, a consumer bankruptcy lawyer in New Hampshire, says he sees far fewer clients who dont have health insurance now.

I think before the ACA there were a lot of medically-driven costs in personal bankruptcies, he said. I think that has changed... I can only think of one in the past few years that was true of.

Related: With Obamacare repealed, 1 in 4 adults could be uninsurable due to a pre-existing condition

Related: Birth control pills are the rare prescription drug thats actually become cheaper

Medical bills, which are famously costly and unpredictable, have been historically estimated as the leading cause of bankruptcy filings. Other reasons include a lost job, reduced income and divorce, Gaudreau said.

A 2009 Harvard study estimated medical issues were responsible for 62% of bankruptcies, while a 2013 NerdWallet analysis based on the Harvard study came to a more conservative conclusion, or 57%. (Another study, done at Northeastern University, found a far lower rate, or 18% to 25%.)

The problem with looking at medical bankruptcy specifically is the same as deducing the cause of personal bankruptcy more generally: there isnt always one reason. The NerdWallet analysis, for example, didnt include indirect reasons for medical bankruptcy like lost work.

People use a credit card because they cant afford to pay for food and gas, so they can pay their medical bills because they have to keep their physician happy, Gaudreau said.

The latest numbers may pose an additional hurdle to repealing the ACA, the likelihood of which has dimmed recently after opposition from lawmakers. Though President Donald Trump ran for office on promises to repeal and replace the ACA, that effort has been challenged by divisions within the Republican party.

Read: What Trump can do to undermine Obamacare, now that the GOP health bill has failed

And, even if the health care law has contributed to a decline in personal bankruptcies, theres still evidence of its financial difficulties. Health-care premiums have gone up substantially in certain areas, and the high-deductible plans expose those on them to large out-of-pocket expenses.

See more: Entrepreneurs and small businesses on why they hate and love Obamacare

Moreover, its possible premiums could increase even more next year. High-profile exits from the ACAs exchanges or specific state exchanges could cause premiums to spike, and there could be even more departures health insurers have until June to decide.

Health Care Select Sector SPDR has risen 5.8% XLV, -0.49% over the last three months, compared with a 3.9% rise in the S&P 500 SPX, -0.13%

See the rest here:

Obamacare helped make a 50% dent in personal bankruptcies ... - MarketWatch

Wall Street Journal (subscription)

Puerto Rico Enters Bankruptcy Wall Street Journal (subscription) Puerto Rico was placed under court protection on Wednesday in what amounts to the largest-ever U.S. municipal bankruptcy, a stark illustration of the depth of the economic crisis afflicting a U.S. territory with more than three million inhabitants ...

The rest is here:

Puerto Rico Enters Bankruptcy - Wall Street Journal (subscription)