For some people, the mortgage crisis and the financial problems it spawned seem never to go away. From the initial finance-company, induced real estate bubble that drove the unbridled speculation that almost brought down the entire American economy, to the robo-signing foreclosure abuse, the residential real estate market has seen its share of disasters.
Finances can be confusing and with April being Financial Literacy Month, understanding something about bankruptcy is good for everyone, including those who believe they will never have to file a bankruptcy. Various Bankruptcy Acts have been in place since the founding of the Republic, and the current version was enacted in 1978, and significantly amended, most recently in 2005.
In a Chapter7 bankruptcy, you can receive a discharge of your debts. This means that creditors can no longer collect on any of these debts. As part of this process, when you file your bankruptcy case, a trustee is assigned. The role of the trustee is to gather all of the assets of the debtor and sell them to pay off the creditors. In most Chapter 7s, the debtors do not have any non-exempt assets. Exempt assets are items like basic clothes and other personal property necessary for everyday life.
The U.S. Trustee Program (USTP), which administers bankruptcy cases, has announced the last month it "indefinitely suspended" its audit program for consumer bankruptcies. This has been done because of budgetary constraints. This is not surprising, as the USTP is part of the Justice Department, and Justice, like every other department in the federal government, has been subjected to very tight budgetary controls for many years. The sequestration, which requires all departments of the federal government to make 5 percent cuts across the board, is only the most recent and high-profile budget cut to come along.