Bankruptcy is a word that you often hear in reference to many situations yet many do not even fully understand what it is. It is necessary to gain a broader understanding of bankruptcy for anyone involved in business transactions or even those involved in buying or selling a house. When broken down bankruptcy is actually quite simple and being able to differentiate the different categories of bankruptcy can help you make accurate decisions when doing business or when deciding if bankruptcy is even an option for your current financial situation. Below you will find a brief overview of what bankruptcy is along with an explanation of bankruptcy types and how to accurately search through bankruptcy records.
What is Bankruptcy?
Bankruptcy is a legal status that either an individual or a company can file when they are no longer able to repay their debts or loans. The jurisdiction which the individual or company files for bankruptcy with will decide in a court of law if the debts should be eliminated, payed pack, or partially paid back. All of this is decided depending largely on the factors which surround the individual or company who files for bankruptcy. For individuals, upon filing for bankruptcy the court will order an "automatic stay" which prevents creditors from being able to take immediate action to collect the debts that the individual owes them. This allows a certain barrier of protection for those who are bankrupt. It is important to note that not all debts can be removed by filing for bankruptcy. The most commonly known debt which is not eliminated by filing for bankruptcy is student loans.
Types of Bankruptcy
There are several different kinds of bankruptcy that you can file for with each kind having its own set of rules and process for the elimination for debt. There are technically a total of six kinds of bankruptcy but only two which are common and relevant to individuals. The first kind is known as chapter 7 bankruptcy. This is also referred to as "liquidation." In chapter 7 bankruptcy the majority of debt is canceled or repaid by the liquidation of items that are seen as nonessential to the individual filing. In order to qualify for chapter 7 your income must be below a certain level. Chapter 13 bankruptcy is for individuals whose current salary does not qualify them for chapter 7 bankruptcy. Chapter 13 bankruptcy rather than eliminating debts sets up plans for the debtor to pay of their debts in reasonable amounts over an extended period.
How to Search For Bankruptcy Records
There are many reasons you may want to search bankruptcy records for either yourself or potential clients and home buyers. Thanks to the internet it is now easier than ever to find bankruptcy records. To do this you have to access the PACER website. PACER stands for public access to court electronic records. Once on the website you need to create an account in order to have access to all electronic records that have been filed in court. If you encounter difficulty in understanding the bankruptcy documents once you find them it is advisable to hire a professional to go over them with you to ensure that you read them correctly.
Search Background Checks by State
Bankruptcy records are usually included in background check reports.