Bankruptcy laws are one of the important financial aspects in the United Kingdom. There are many chapters under bankruptcy, but three are most important:

Bankruptcy chapter 7
Bankruptcy chapter 11
Bankruptcy chapter 13

Today, we will discuss about the chapter 7. Majority of people like to file the bankruptcy under chapter 7 because debtors get rid of almost all existing debts without any problem. And he/she gets an opportunity to make a fresh start again. It is not easy at all. After getting the bankruptcy, you have to face lot of problem. According to experts, it is like a black spot on credit history which can not be eliminated for next seven to ten years. This is the only reason why it is important to discuss properly with experts or consultant before filing.

Bankruptcy laws help people to make new financial start when he/she is not able at all to repay existing debts. While filing a bankruptcy, people can discuss the matter or case with attorney. Attorney is person who can help you a lot. They read your case properly and try to understand the situation as well. After evaluating the case, they give you nice advice whether you should file or not. Under bankruptcy chapter 7, courts have right to sell the property of debtors to recover the money of creditors and they do so as well.

Debtors are required to file bankruptcy petition which contain the complete information about the creditors, for example, number of creditors, debts amount, total debts, individual debts etc. Many times, people file the bankruptcy just to save themselves from debts. It is strongly recommended not to follow this practice.

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Bankruptcy, the Bible and Christianity

We live in a time like no other. Here in Michigan, many of us are struggling to just to keep up with our day to day living expenses. As a result of divorce, job loss or illness, many of us have incurred debts that we can never repay. Many Christians feel guilty about filing for bankruptcy. We know that bankruptcy is a legal right guaranteed by the Constitution – but still – we are buried in guilt because of our strong Christian beliefs.

Before I filed bankruptcy myself back in 2005, here are some things that I thought about.

The Bible Does Not Condemn Bankruptcy

First and foremost, the Bible does not condemn bankruptcy. In fact, the Old Testament provided that debts had to be forgiven every 7 years? No questions asked – no bankruptcy petition necessary. Here was the law: At the end of every seven years you shall grant a release of debts.

Similarly, the Old Testament commanded people to free their slaves every 7 years. The Bible refers to debtors as slaves to their creditors. So, based on the Bible, creditors are required to free their debt slaves every 7 years. Interestingly, under the bankruptcy law – you can file for Chapter 7 bankruptcy every 8 years.

Jesus and the Bible Both Talk About Mercy, Forgiveness and a Fresh Start

In both the Old Testament and the New Testament, compassion, mercy and justice were ideals that were superior to material things and economic concerns – like repaying credit card loans.

The Bible also speaks to compassion for those who are oppressed by over-burdensome debts. The Old Testament provides many examples of the need for compassionate treatment of the poor and for the preservation of the family unit – compassion for the poor and support for the family were always more important than the material concern of repaying debts.

Deuteronomy 15:7-10 says: “If there is a poor man among your brothers… do not be hardhearted or tightfisted toward your poor brother. Rather be open-handed and freely lend him whatever he needs. Be careful not to harbor this wicked thought: The seventh year, the year for canceling debts, is near, so that you show ill will toward your needy brother and give him nothing. He may then appeal to the LORD against you, and you will be found guilty of sin. Give generously to him and do so without a grudging heart; then because of this the LORD your GOD will bless you in all your work and in everything you put your hands to.”

Jesus taught us about the law of mercy and the law of forgiveness and the importance of being gracious to everyone – even debtors. Jesus said “It is easier for a camel to go through the eye of the needle, than for a rich man to enter into the kingdom of God.” He went on to teach “Use worldly wealth to gain friends… so that when it is gone, you will be welcomed into eternal dwellings.” Finally, Jesus taught us to “forgive and you shall be forgiven.”

Sin is a type of spiritual debt. In the Lord’s Prayer, Jesus told us to ask God to “forgive us our debts [sins] as we forgive our debtors [those who sin against us]“. Sin creates a spiritual debt. Borrowing money or using a credit card produces a financial debt. Through the eyes of Jesus and under the law of mercy – both types of debt can be forgiven. As with any act of mercy, someone must bear the cost of forgiving the debt. Jesus bore the cost of our sins by dying on the cross. In bankruptcy, your creditors must mercifully bear the burden of the forgiving your debts understanding that God will bless them for these acts of forgiveness and mercy.

Jesus taught us about the importance of forgiving financial debts to teach about God’s forgiving nature and the Christian principle of forgiveness. Jesus said “When they had nothing with which to repay, he freely forgave them both.” On a spiritual level, through God’s grace and mercy, Jesus gave us a “fresh start” by canceling all our “sin” debts through His suffering and death on the cross. Here in modern times, the US Bankruptcy Court will help overburdened debtors by giving them a fresh financial start.

Modern bankruptcy laws – just like these Biblical provisions – allow debtors to keep certain property when they file bankruptcy so that they can get a fresh start. These “fresh start” provisions discourages debtors from going into debt-bondage again – just to survive.

Jesus Condemned Excessive Interest Charges

The Bible prohibited anyone from charging excessive interest. Current credit card interest rates of 35% or pay day loan interest in excess of 2000% would have been strictly forbidden.

Exodus 22:25-27 says: “If you lend to one of my people… who is needy, do not be like the money lender; charge him no interest. If you take your neighbor’s cloak as a pledge, return it to him by sunset, because his cloak is the only covering he has for his body. What else will he sleep on? When he cries out to me, I will hear, for I am compassionate.”

Leviticus 25:35-37 says: “If one of your countrymen becomes poor and is unable to support himself among you, help him as you would an alien or a temporary resident, so that he can continue to live among you. Do not take interest of any kind from him, but fear your God, so that your countryman may continue to live among you. You must not lend him money at interest or sell him food at profit.”

Deuteronomy 23:19-20 provides: “Do not charge your brother interest, whether on money or food or anything else that may earn interest.”

Jesus relied on these Biblical principles when he admonished the “money changers” and removed them from the Temple. Jesus “poured out the changers of money and overthrew the tables.” Jesus repeatedly talked about the importance of placing love and compassion above greed and wealth saying “If you lend to those from whom you hope to receive, what credit is that to you? Even sinners lend to sinners, to receive as much again. But love your enemies and, do good, and lend, expecting nothing in return, and your reward will be great, and you will be sons of the Most High; for he is kind to the ungrateful and the selfish.”

The Bible and Jesus Both Promote the Family Unit

The support of family and a stable society are found all throughout the Bible. Wealth was viewed as a blessing from God which resulted from obedience and was based on God’s compassion. Being compassionate for the poor and forgiving debts were all tangible ways that Israelites could show compassion for each other and honor God by following His law.

These principles are all found in our modern day bankruptcy laws. The underlying principle is that debt can be canceled to achieve some higher purpose – like the preservation of the family unit and the stability of our society.

Seek Counsel, Confess and Move On

If you can repay your debts, you must. If you can’t, then you should determine how God would have you freed from the bondage of debt. The Bible tells us to seek wisdom and guidance from God and to seek Godly counsel.

If you have mismanaged your finances, confess your failings to God. You can receive God’s forgiveness and cleansing. Remember, there is no condemnation or guilt to those who are in Christ Jesus. Jesus, by His love and mercy, gave us a fresh start, a new birth. Bankruptcy is based on the law of mercy with divine origins and will help you get a fresh start – a new life!

The Bankruptcy Laws Are Based on the Bible

The bankruptcy laws were written with Biblical principles in mind. Any person who files for bankruptcy must have “clean hands” and fully and honestly disclose all the facts regarding their financial matters. Debts involving fraud, drunk driving, and deliberate wrongdoing can’t be discharged. Moreover, the bankruptcy law does not allow the discharge of child support and alimony debts or student loans or taxes. Through these restrictions the bankruptcy laws seek to balance justice and equity. Just like the Bible, our founding fathers recognized the importance of bankruptcy to help overburdened debtors get a “fresh start.”

I hope that this short article helps you with your decision to seek counsel and relief from your burdensome debts. The Bible and Jesus condemned excessive interest on loans and credit cards. The Old Testament required that creditors forgive their debtors and free their slaves every 7 years.

I hope that you can see the connection between the bankruptcy law and the Biblical teachings of both the Old Testament and Jesus. Mercy, forgiveness and a fresh start are central themes. The law allows you to get out from under burdensome debt so that you can provide for your family and live a good Christian life.

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Bankruptcy is a relief to the debtors who are really worried about their debts. Bankruptcy has manifold aspects. The debtor files for bankruptcy under any of the suitable chapters as introduced by US code.

Under bankruptcy chapter7, a debtor gets relief in form of exempted property which he /she can retain as his/her possession. This procedure of safeguarding a certain amount of property in favor of the debtor actually aims for a fresh start when they are overburdened by debts. As for an example, in many states the defaulter is allowed to keep clothing, household furnishings, an expensive car (may be inexpensive one that depends on the state law). Even after the closure of the bankruptcy cases the debtor needs at least some basic assets to lead his life further. Hence the bankruptcy code identifies basic needs and provide various property exemptions for the debtor.

Just like the rules for the exempted property varies from state to state, the percentage of exemptions enjoyed by the debtor is actually determined by the district court. There are also few limitations in this case, as all the properties of the debtor do not come under this category. The assets which are not discharged according to the chapter 7 bankruptcy code are excluded from this category. As it is already discussed, that the properties like household furnishings, cars are considered to be exempted similarly if the debtor is having any retirement fund or any other such kind of a fund it is considered to be out of reach of the creditors. Actually the amount of exempted property of the debtor depends on the state where he resides. Among the different types of exempted property for the different districts a few has been mentioned below:-

a) Tools for trade exemption – If the debtor is a motor mechanic or a dentist and the tools used by him are for earning their livelihood is considered under exempted property.

b) Farm tools exemption – If the defaulter is farmer in that case also the code according to the district law permits to keep the tools with him if his primary occupation is farming. However in some states farm tools include items which can be held in hand like hoes, axes, pitchforks, shovels, scythes. Whereas in other states farm tools also include ploughs, harnesses, mowers, reapers and other tools.

c) Crop exemption – The code also permits debtor to keep some products that are obtained as results of farming and raised annually or gathered in a single season.

d) Building materials exemption – It also permits a debtor to keep his certain amount of items needed to build or maintain structures like lumber, bricks, stones, iron. however this is not allowable in all states

e) Furnishings exemption – It also permits the debtor to keep a certain amount of furniture, equipments in his home and other things through which the home is decorated like carpets, drapes etc.

f) Health aids exemption – the debtor can also save the items which help him to keep his health maintained like wheelchairs, crutches, hearing aids. States either consider all the health aids as exempted or limit the total dollar amount.

g) Heirloom exemption- The bankruptcy code allows the debtor to pass certain assets which are possessed from generation to generation and which have some special emotional value or fiscal value.

h) Homestead exemption- It also saves a particular value or particular acres of farmhouse. The amount that the debtor can protect depends on the state where he lives. In few states unlimited homestead exemption is provided i. e. even a house worth millions of dollars cannot be taken under the liquidation of the chapter 7 bankruptcy code. On the other hand few states have no homestead exemption at all.

i) Animal exemption – Bankruptcy code also allows the debtor to keep some animals which are household pets, livestock or poultry. The animal exemption differs from state to state. In few states debtors are only allowed to keep livestock and poultry but not pets.

j) Appliance exemption- It also permits the debtor to keep some of the household equipments consumed by the help of electricity, gas or propane which may include refrigerator, stoves, washing machine, etc.

k) Arms & accessories exemption- The debtor under this code is allowed to keep some weapons which are the part of a soldier outfit or uniform such as the belt packs but not the clothes etc.

l) Household goods exemption – A debtor can also keep his household utensils which include linens, dinnerware, pots, and pans and small electronic equipments like radio toasters etc

m) Burial exemption – The debtor can also protect a cemetery plot, tomb, monument or the cash to purchase a burial plot. In some cases a few states allow the debtor to claim the a burial exemption only if the debtor does not use his homestead exemption. This exemption is available in most of the states

n) Jewelry exemption – This saves certain assets of the debtor which include articles of adornment and fashion like jewelry, and watches. However expensive jewelry is usually not included under this category although many states declare wedding and engagement rings. In most states the total jewelry exemption ranges from $250 to $1, 000.

o) Motor vehicle exemption- under this a debtor can save his self owned motor vehicle. In case if his motor cycle costs $10, 000 but the state in which he is residing allows a car exemption of $2, 500 then the debtor is still under debts of $8, 000 to his creditor as he has only equity of $2, 000 ($10, 000 – $8, 000) for himself ( this proves that the debtor can be able to pay his car payments). The debtor on the other hand if fails to pay it then the creditor can croak the car and sell it out in auction.

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Debtors are usually able to discharge most or all of their debts. Once a debt is discharged, a creditor may not attempt to collect it from the debtor.

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Chapter 7 bankruptcy is the most common form of bankruptcy that is filed for in the US, and its primary purpose is to give individual debtors a fresh start by discharging debts. Discover how individuals get to choose to keep certain exempt property under Chapter 7 with information from an independent CPA in this free video on Chapter 7 bankruptcy. Expert: Miranda Chook Bio: Miranda Chook is a CPA with expertise in international operations. Filmmaker: Bing Hu

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Although federal bankruptcy law mainly regulates bankruptcies, the individual states can have specific guidelines for the process within their jurisdiction. States can typically choose to have their own rules that govern the types of exemptions that the debtor is allowed to keep after filing for a discharge of their debts.

For instance, some states will allow debtors to keep their homes no matter how expensive or extravagant they are whereas other states will force the liquidation of property as an attempt to pay off the debts. Other variations include the types of debt that a debtor can discharge, although many of these are federally mandated without exception.

Florida bankruptcy law heavily favors debtors in regards to the property that they can retain. In fact, Florida has a reputation for being one of the most liberal states in the country for debtors to petition for a discharge of debts. The state government has elected to opt out of the federal regulations concerning the debtor’s lawfully retainable property.

According to Florida bankruptcy proceedings, you can keep more of your personal property during a bankruptcy than in any other state. As a result, many people who plan to file often move to Florida with their assets in order to take advantage of the state’s lenient bankruptcy law.

To see a contrast in the how the bankruptcy law changes from state to state, look at the exemptions that the Maryland law allows. Maryland is stricter in regard to the debtor’s assets that must be liquidated in a bankruptcy.

For instance, a debtor who files bankruptcy in Maryland is only entitled to keep $500 worth of household goods and furnishings as well as $3,000 of cash in their bank accounts. Also according to Maryland bankruptcy law, debtors can only retain up to $2,500 worth of personal property and the rest must be sold or liquidated so the proceeds can go towards paying the creditors.

Different states have varying guidelines regarding bankruptcy law, but each category has specific regulations, too. In a Chapter 7 bankruptcy, for instance, you can have many of your debts completely discharged so you can get a fresh financial start.

On the other hand, Chapter 13 bankruptcy requires you to enter into a repayment agreement that the courts will oversee and make provisions to help you pay off your creditors in a timely manner. Rules also vary as to how much of your property you are allowed to retain when going through a bankruptcy.

Although federally regulated, bankruptcy law hinges on the guidelines of the individual states and the bankruptcy chapter that the debtor chooses to file. While some states have lenient laws that favor the debtor’s situation, the bankruptcy laws in other states tend to favor the creditor.

Until the recent amendments to the federal bankruptcy code, the federal guidelines favored the debtor, but those times have changed and now it is much more difficult for a debtor to completely discharge their debts. As a result, many people either try to find solutions through loopholes in the system or they deal with the ramifications that filing for bankruptcy will have on their financial future.

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Many bankruptcy questions usually run through debtors minds once they have been declared insolvent and are no longer able to pay their creditors. One is left to wonder what is required of them next and what the situation will affect their image, credibility and career path. This article will help answer some of the most commonly asked questions about insolvency.

Who will know? In as much as this may hurt your ego or image, you need to know that once you have been declared bankrupt and you have filed for the same, your name will be published in the local dailies. Future potential business partners or employers may not take this very well. Will I ever be able to get credit again? As difficult as it may seem, you are eligible for secured credit cards.

However, this only works with a few specific banks and may not necessarily be applicable with every bank. For much bigger loans like mortgage, it will not be until after two years after your name has been cleared from the records that you will be able to access such. Do I need to take counseling classes before filing for bankruptcy? The choice is yours but it is not entirely necessary.

What you need is a good attorney who will work with you all through the filing process and who will properly represent you to your creditors. Counseling might just cost you much for nothing but with a good attorney, you have it all together. 4. How much will it cost? Different bankruptcy lawyers will charge different fees but on an average, you will part with roughly $1,000-$2,000. For you to keep the charges down, be sure you are well prepared in advance.

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