A Closer Look At Bankruptcy

Bankruptcy is a legal proceeding regarding a person's financial status.

If an individual has run into financial difficulties and is unable to pay their bills then this is a way to start anew. The federal law makes it possible for an individual to file for bankruptcy. All cases of bankruptcy take place in federal court.

It is important to note that your creditors cannot expect repayment of any debts while you are tied up in bankruptcy. Arrangements for when and how you are to pay your debts must be decided upon in the court of law.

Please be aware that filing for bankruptcy will affect your credit rating adversely and it will take you some time following bankruptcy to rebuild your credit.

What Can Filing for Bankruptcy Do?

Filing for bankruptcy can make it possible for you to stop down the destructive financial road you are on and get back on track.

There are many things that bankruptcy can clear the way for you to do.

Bankruptcy can take away the legal obligation that is upon you to pay your debts.

While there are some debts that cannot be wiped away with the help of bankruptcy, many of them can.

This is what is referred to as a discharge of your debts.

If you are presently facing foreclosure on your home, then filing for bankruptcy can provide you the opportunity to breathe a little easier.

It will also give you the chance you so desperately need to catch up on the payments that you have missed.

Be aware however that a bankruptcy will not make your mortgage go away. You are still required to make regular payments. It also does not make any liens that currently exist on your property go away. Payments are still a necessity!

A bankruptcy can make it possible to prevent repossession of your vehicle or any other property you have. It can also help end harassment you are suffering at the hands of collectors and threats of being sued by collectors for repayment.

Bankruptcy can also put an end to wage garnishment. If you have had your utilities cut off because of lack of payment or if you are in jeopardy of this happening, then filing for bankruptcy can improve the situation so you can go back to having lights, heat and water in your home.

The Limits of Bankruptcy

The flip side to bankruptcy is the ways in which it is limited. There are things that bankruptcy cannot assist you with. Bankruptcy is not a quick fix for all of your financial woes.

For instance, the rights of secured creditors must be upheld in the event of bankruptcy in most cases. A secured creditor would be someone who has taken either a lien on your property or a mortgage as a form of collateral on a loan.

Examples of these include mortgages for homes and car loans. There are other types of debts that are rarely discharged in a bankruptcy as well. These include child support payments, alimony, some forms of student loans, money owed to the IRS, criminal fines and restitution orders.

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Bankruptcy Filing

Going bankrupt is something that is hard to imagine happening to you. When bankruptcy does occur though, you have some options that you can try. For these bankruptcy options to work you will need to consider bankruptcy filing. The options will include chapter 11, 13, and 7.

Each of these types of bankruptcy filing allows you a breathing space while you try to sort out your financial mess. The most well used bankruptcy claims are chapters 13 and 7. In these two options you will be able to talk with your lawyer and find the best method for paying off your payments.

In general chapter 7 and chapter 13 bankruptcy claims ensures that you can’t be forced to pay further debts once you have placed a bankruptcy filing. For your creditors to stop contacting you it is essential that you file a bankruptcy claim.

Once the bankruptcy filing has been accomplished your payments will commence. These payments will be made depending on the type of bankruptcy that you have filed for. As both of these bankruptcy filings are very different it is best if you understand what happens when you file bankruptcy claims.

In the chapter 7 bankruptcy filing you agree to liquidate all of your disposable and non-exempt assets. These assets, money, and property are turned over to a court appointed bankruptcy trustee. This individual will start the process of turning your disposable assets into cash. Once the amount of money that you owe has been found, the trustee will distribute them amongst your creditors.

You should make sure that when you are preparing for bankruptcy filing that you have given your lawyer a list of all of your creditors so that the proper payments can be finalized.

This step in bankruptcy filing will wipeout all of your debts, excepting for certain non-dischargeable debts. You will however need to discuss with your lawyer the best ways to go about bankruptcy filing for chapter 7 and in some cases chapter 13.

The chapter 13 bankruptcy filing will allow you to make arrangements with your lawyer to pay off these payments as best as you can. The lawyer will examine your bankruptcy case history before you can begin the bankruptcy filing process. Once the filing has been finalized you have a period of 5 years to pay off your debt.

Bankruptcy filing is the best way to make sure that your bankruptcy claim is following in the proper path. Your lawyer should be able to advise you on the best route of bankruptcy to file for.