According to the American Bankruptcy Institute, consumer bankruptcies jumped nearly 18 percent in the first quarter of 2001 compared with the same period a year earlier. The Federal Reserve finds that the burden falls heavily on low- and moderate-income people, who in the last decade became the targets of credit card marketers. Across the country, the ability of consumers to handle their debts is declining.
While unable to furnish legal advice to individuals, the California Attorney General believes it important to provide information to help the public.
Whether your financial crisis is caused by personal or family illness, the loss of a job or overspending, these problems can be overcome by taking action. Helpful information is available from the Federal Trade Commission on matters ranging from controlling your debt to filing for bankruptcy.
Bankruptcy information is available from the United States Trustee Program or by contacting the Executive Office, US Trustees, Office of the General Counsel, US Department of Justice, 901 E Street, N.W., Suite 780; Washington, D.C. 20530; (202) 307-1399.
Generally, bankruptcies involve the development of a plan under federal court supervision to pay outstanding debts by dividing a person's assets. The plans are overseen by the United States Bankruptcy Courts and governed by Title 11 of the United States Code. Many of the supervisory and administrative duties of bankruptcy proceedings are handled by trustees.
There are two basic types of bankruptcy proceedings. The most common is "liquidation" filed under Chapter 7, which involves the appointment of a trustee who collects the non-exempt property of the debtor, sells it and distributes the proceeds to the creditors. Bankruptcy proceedings under Chapters 11, 12, and 13 involves a plan to allow the debtor to use future earnings to pay off creditors.
A bankruptcy proceeding can either be entered into voluntarily by a debtor or initiated by creditors. After a bankruptcy proceeding is filed, creditors generally may not seek to collect their debts outside of the proceeding. The debtor is not allowed to transfer property that has been declared part of the estate subject to proceedings.