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Unpaid Debts and Bankruptcy | Free Financial Law Essay
The bankruptcy is seen as a legal process in which it can give assistance to those who are not able to pay for their bills and they do this by offering the people an opportunity to know how to pay their debts that they were not able to pay. The bankruptcy is taken as the last resort when one's not able to pay the debts and therefore one is forced to file it so that it can be a cover for the property that one has therefore this filing of the bankruptcy will enable the person have the better time allocation for the payment of his or her debt and be without fear of losing any of his or her product but this will depend on the type of the bankruptcy that such person will possess. It could also give the people an opportunity over a given period of time that would mean that such a person would have the time span that would lead to the payment of that particular debt. The advantages of this bankruptcy include: it leads to the discharge of most of the debts in that the person has been assured that the debt will have to be paid this is because incase of discharge such a person will not have harassment, anxiety or the marital stress, this is because such a person will b e freed from the credit card debts that one can use to pay the rent or make the payment that is required in the right time. (Martin, 2004, pp45)
There is also the breathing spell where by the creditors have a stop to the collection efforts during this time and this will enable the person to have the possessions and other important things that are required so that one can be able to stay without debts. Throe is the protection of the property and income in that this been a legal process then the law covers the property of that particular individual and therefore with this law no body can force you to pay the debts from the money or the property which is recognized by the law as exempt. This law allows that particular person have the basic necessities of life and therefore your property or money can not be taken away from you if the law has intervened in you. There are other protections in that the law can provide the protection to the house or car or it can eliminate aliens that have been placed on the property. This means that one is secure with his or her property and no body can take it and incase of the dispute over a debt then the federal bankruptcy court has to be sympathetic on the debtor where by the creditors have taken their claims and through this the payment of that debt becomes possible and therefore no one has got to loss. The disadvantages of this bankruptcy are: the person does not owe a large debt in that such a person should have a limited debt of have other options rather than just filing the case. One can defend in the court case to have a challenge to the existence of the debt. The person's property is exempted which is seen as desirable but it is not necessary to have protection of the property. The person might end up losing the non- exempt property this is because if one is not able to pay the debt and has got high property then this property can be sold so that the debt can be paid and therefore this means that such a person will end up losing the property. There is the effect on the credit this is because the filing of the bankruptcy has got to continue even if you are not willing to have the file and therefore the problem in the credit in future would be hard to predict. This means that such a person will have a report that will not be interesting of the credit in future. (Ben, 2005,pp56)
The cost of filing for the bankruptcy might be very high meaning that one will end up losing most of his or her income in filing this bankruptcy and therefore although it is seen as a way of improvement this can lead to more losses been achieved by the creditor. One also might be forced to go deeper in the debt and therefore it is advisable for the creditor to wait before filing the bankruptcy until the time when he or she sees it to be secure. In the filing of the bankruptcy it has been complicated and therefore it not advisable for any one to obtain this legal step. Some people file bankruptcy due to the fact that they see it necessary to save most of the important properties and therefore without this cover then it can lead to loss of a property that is very important for that person like land. There are different types of the bankruptcy that is the chapter 7 that is seen as the straight bankruptcy where by the debtor is supposed to give up the property, which will be more than the exemptions for the property to be sold so that it can be paid to the creditors. In this then the debtor will have to loss the non- exempt property so that it can be paid to the creditor. There is the chapter 13 which is also the debt adjustment were by the debtor is supposed to file a plan that will show how to pay some of the past due and the current debts over a given period of time that is 3 to 5 years. (Argawal, 2004, pp78)
The bankruptcy does not wipe all the debts in that incase of the secured debts one is supposed to attach the security interest against what is to be bought and therefore if one is not able to pay then the creditor is liable to repossess the item and therefore in filing the bankruptcy then it becomes impossible for the debtor to keep the property unless such a person keeps on paying the debt. There is the child support, alimony and maintenance in this support then there is no discharge in the bankruptcy at all. There are other types of debts that may be singled out by the bankruptcy code for special treatment things like the students' loans and therefore this type of debt one is supposed to pay it and not file the bankruptcy, as the court will not be liable to it. Meaning that one will have to pay what is expected there is no other option. There are the unlisted debts in that if the debt not listed on the forms then it means that it will not be possible for such a person to file the bankruptcy. In filing the bankruptcy then one is able to keep some of the property in that the property that is seen by the law to be exempt one will not loss that property but if it is high above the exemption amounts then the bankruptcy trustee will not consider it and therefore this might be sold to repay the debt, this is an argument in the straight bankruptcy and in the debt adjustments one can keep all the property as long ads one has a plan that is supposed to meet the requirements of the law and be able to keep up with the payments. Incase where by the property like the car or home is fully exempt then it means that one will not loss that property as seen in chapter 7 then one can avoid paying on the debt and pay the creditor an amount that the property that is to be kept is worth and it is applicable for the items of low value. In the chapter 13 it shows that one is supposed to keep the property even if it is not fully exempted so long as one has to pay the amount under the plan. This means that one will have hold of the property with or without the exempt and therefore the loss of that product is not possible. (Argawal, 2004, pp78)
There has been increase in the personal bankruptcies in the developed countries in that in US the people have been using the two types of bankruptcies were by they see that with the homestead exempted then in chapter 7 it was seen as about 70 % of the filing bankruptcy in the year 2000 and the chapter 13 was seen as a way that was specifically for the fliers where by they were supposed to make payment of a certain amount according to the plan that one had surrendered and usually most of the period was about 3-5 years. US chapter 13 arrangements was seen as a norm by other countries like in the Netherlands and the UK where by the bankruptcies had to accept the plan that is set for the payment of that debt. The judge can ask the creditors to cooperate but they have their instruments that are used so that they can pursue their interests this means that it is not possible for them to follow that is set by the judge and therefore it is not very easy for them. In American the record for the people who had been filed for bankruptcy was about 1.2 million and this bankruptcy had become the most common thing that affected people and led to the loss of stigma. The rise in the bankruptcy had been due to the insufficient pays that has led to the high abuse. The increase in the filing of the people failing to pay their debt had a high influence by lawyers' advantages so that they could solve the problem very fast because of the rise in economic changes throe was a problem on what could happen if the market could be rushed. Most of the factors that led to the rise in bankruptcy in the countries included: the abuse of credit card this happens where by one purchases the products and does not know whether the income is been taken out meaning that the purchases can be made of things that are not needed or within the budget. This would mean that one could spend over $15000 in the use of this credit card to make purchases this was according to a research done in US. There was the smoking it was reported that in a single year in united states used more than $25,000 for hospital bills and also showed that the babies that were born to mothers who smoke were in a risk of development of palates where by the cost that would be spent on the treatment of this disease would be about $200,000 in one year. (Adams, 2002, pp89)
In a country like US it was estimated that the health care cost that was used to treat the smoking related sicknesses would be about $60 billion and therefore the smoking was a great contributor to the bankruptcy. The abuse of alcohol was seen as a health problem, which meant that most of the diseases such as the ulcers were resulting from the use of the alcohol. This meant that the country was engaged in the use of high amounts that resulted from the disease that were caused by the use of alcohol. Those drivers, who were under the influence of the alcohol resulted to the abuse on the traffic rules, had exceeded speed limit and some went to the extent of misusing their children. Therefore in every year most of the damages that were reported were from the crimes that resulted from the use of alcohol, which led to the financial crisis, and the rein of bankruptcy. There was the drug abuse which was estimated that the annual cost in the united sates that resulted to the use of the drugs was about $70 billion and the health care costs of most of them resulted from the fact that these people became lazy, they either reported to duty late and most of them were absentee in the work place this meant that the cost had to rise to get cure for the affected person. This meant that in the line of employment most of the people were involved in the unwanted practices that could lead to the wastage of time leading to more effect on the working of that particular organization. The promiscuity showed that in US most of the people about 14 million were affected by the sexually transmitted disease this meant that each year a lot of income was spent in the treatment of these people this was due to the fact that promiscuity was very high and therefore it lead to most of them been infected leading to loss of income. This was due to the fact that these STDs required much attention and therefore it led to the people having a lot of problem in coming into the payment of the cost that was related to the cure of these diseases. (Alice, 2001,pp, 67)
Most of the STDs had no cure and therefore the affected had to just use the tablets that would push their lifespan. Apart from the health costs this promiscuity led to more divorces occurring in the country this was due to the fact that if one partner was infected then the other found no need to stay and take care of the infected person and therefore most of the children were left orphans with either one parent or without parents at all. This was a high loss in the country because the government was supposed to take care of the affected children so that the economy could be raised. There was the gambling where by it was reported that in Australia more than 300,000 were problem of gamblers and accounted for the loss of cash for more than 4 billion dollars in every year. This loss of income was not for the gamblers only but it was recorded that more than 2 million people were directly affected as a result of the bankruptcy.
The bankruptcy is seen as important thing that can be used to repay the health bills this is because there is a high raise of the sicknesses that require a lot of income investment and therefore one may not be able to pay this will lead to losses that will affect the economy of that particular nation. Therefore the nation should ensure that most of the people are assisted like for example it was seen that more than 50% of the Americans were not able to get doctors due to the high costs and also more than 50% were not able to fill their prescriptions this was due to the high costs that were related to this act and therefore this led to high loses of people's lives leading to more effect to the economy of that particular country. It was seen that most of the developed countries were required to have insurance for all the citizens but this was not the case in Americans and therefore most of the poor people in the nation were not given what they expected and therefore the US could not be compared to the other nations. There was the indication that the US had to have high spending on health care but the sicknesses in that nation was more as compared with the other nations. (Alice, 2001,pp, 67)
The personal bankruptcy in the developed nations has been seen to be rising this is due to the fact that with the changes in economy then people are spending more in different areas like in the health care therefore the country will loss more due to the rise of many diseases that are caused by different behaviors. This will mean that in future the developed countries have to get better ways that will assist them in dealing with this problem so that there economy will not be affected the more.
- Adams, D, 2002, regulations of the consumer bankruptcy, journal of legal studies.
- Alice, M, 2001, the basics for bankruptcies in US, administrative office of United States court report.
- Argawal, N, 2004, the determinants of credit card problems and bankruptcy, journal of economics and finance.
- Ben, H, 2005, health care crisis in American, empirical analysis of health care.
- Martin, D, 2004, need for the secure of Americans for a better health care, common wealth fund international health policy survey.
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