Bankruptcy Records Search

Bankruptcy is a legal process for dealing with overwhelming debt. The most common reasons for individual bankruptcy are: medical expenses, job loss, reduced income, divorce, student loans, credit card debt, unexpected expenses, foreclosure, and bad budgeting.

There are 90 bankruptcy courts, one in each judicial district in the United States which follow federal guidelines for filing for insolvency. This includes naming a trustee to handle each case. Many who declare bankruptcy never have to attend a court hearing as their schedule of payments and approval of debt discharge is in the hands of the trustee.

About 1.5 million people file for bankruptcy in the U.S. each year, and the vast majority of all bankruptcies are individuals, not businesses. In addition, most bankruptcies concern medical expenses even though the majority of those filing have some type of insurance.

Records of bankruptcies are available from the court where the bankruptcy was filed. The status is reflected on an individual’s credit report for a period of 10 years, which can affect his eligibility for many things from loans to housing, although the Bankruptcy Reform Act of 1978 says bankruptcy cannot be used to discriminate in employment situations. In addition, it is almost impossible to have student loan debt discharged through bankruptcy; debt consolidation is the preferred alternative for the courts.

Types of Bankruptcy

There are several types of bankruptcy. The most common form of bankruptcy is Chapter 7, which is complete liquidation of assets. This form of bankruptcy is used when an individual has no way of paying any debts, has no cosigners on loans, and is expecting legal action by creditors.

Chapter 13 bankruptcy allows a debtor with regular income to retain valuable belongings like his house while maintaining payments to his creditors on a schedule approved by the court.

A type of bankruptcy that applies primarily to businesses is Chapter 11. This type of bankruptcy is designed to allow a business to continue operating while reducing its debts. The court approves the business’ plan to “reorganize” and hopefully strengthen its business plan through is process of reducing debt.

There’s a special category of bankruptcy that pertains to small family farms or fishermen, called Chapter 12. It allows a schedule of debt repayment while the farm/fishing remains in operation. The last type of bankruptcy is Chapter 9, and it applies to municipalities, allowing them to schedule repayment of debts within a court-approved timeframe.

History of Bankruptcy

The theory of bankruptcy goes back hundreds of years, but always with some strings attached. Many cultures allowed some sort of discharge of debts but often limited the number of times that an individual could ask for debt forgiveness. Other societies required debtors who could not pay to work off their debts, including requiring the servitude of family members.