Increasing number of individuals is faced with debt problems every day. Some have a lot of debts but lack enough income to pay back while other are at a bridge of crisis like having to lose a job, or family problems such as accidents or loss. People resort to declaring bankruptcy when they don’t seem to find any other option. But will it really solve the problem? Bankruptcy was originally created for debtor to have a second chance to start their life over. Bankruptcy allows you to clear your debt through a process; though, sometimes it is abuse by individuals. This is why bankruptcy code continuous to be amended to conform to the changing standards of society. But not every debt can be cleared, other are disqualified because of improper procedures in filling.
The bankruptcy codes are written in the following chapters: Chapter 7 refers to liquidation; chapter 11 about reorganization and chapter 13 about adjustments of debts of an individual. Chapter 11 and chapter 13 of the bankruptcy code enable individuals with regular income to develop a plan to repay all or part of their debts. Under this chapter, debtors propose a repayment plan to make installments to creditors last over three to five years. The advantage of chapter 13 is that it offers individuals an opportunity to save their homes from foreclosure. By filing under this chapter, individuals can stop foreclosure proceedings and may cure delinquent mortgage payments over time. Chapter 13 also has a special provision that protects third parties who are liable with the debtor. This provision can also protect co-signers.

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The majority of American families find themselves in the unpleasant life situation of living from paycheck to paycheck and this makes them incredibly vulnerable to financial collapse in the event of a medical emergency, job loss, or other event that disrupts income or creates a dramatic increase in the level of one’s obligations. Typically, when one enters into debt and establishes repayment agreements with his or her creditors it is with an optimistic view that does not take into account the potential for these problematic occurrences to arise. As a consequence it may become impossible to keep up with the demands of your creditors and filing for bankruptcy protection may offer the best solution. Though nobody sets out with the intention to fall behind on the repayment of his or her debts, there comes a point when scrambling and struggling to make ends meet causes more harm than it accomplishes good. It can be difficult to determine where that transition takes place, but a continual inability to make minimum payments on time and an abundance of collection calls and letters are some indicators that a substantial change is necessary. Even when filing for bankruptcy protection offers the best and swiftest path to the resolution of an overwhelming and unmanageable debt load, many people are still hesitant to file. Part of the reason for this is the longstanding negative public perception and judgment of those people who seek the advantages offered by the provisions of the United States Bankruptcy Code. But there are potentially adverse health effects, devastating and irreversible strains placed on relationships, and other troubling consequences associated with needlessly enduring a high stress debt situation.

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