Bankruptcy Basics for Everyone

Why Should You File for Bankruptcy

Filing bankruptcy is a viable option for clients and businesses that find themselves in the position of repaying or eliminating their financial obligations under the safety of a national insolvency court. This is a solution for honest, hardworking people who are looking for a new beginning, but need some debts cleared.

For a better understanding of the topic, personal bankruptcy can be split to two categories: insolvency and restructuring.

According to the Unites States Code, Title 11, there are two chapters whose main purpose is to deal with personal insolvency filings: Chapter 7 (known as Liquidation) and Chapter 13 (known as Individual Debt Adjustment). Following the federal bankruptcy procedures, a debtor’s entitlement to file bankruptcy according to any of those two chapters depends on his or her’s economic conditions and on the constancy of the future revenue. A specialised lawyer in the field will explain the intricate and indispensable information required to perfectly understand one’s rights as a debtor, as well as the obligations that arise from petitioning for bankruptcy.

Chapter 7. Liquidation

According to Chapter 7, bankruptcy qualified debtors are allowed to eliminate their possessions in order to pay some parts of their obligations. In this case, an insolvency trustee will act for the debtor, by gathering and selling what the debtor has, and using the money thus obtained to pay some credits. However, many creditors do not want to receive money when they hear that they come from earnings, which leads to a discharging or “pardon” of the lingering financial debts. When this step is considered completed, the mortgagor is not accountable for the cleared obligations.

This bankruptcy option requires careful consideration, as it will leave the debtor without several possessions. However, some assets might be protected from the creditors’ claims, if they are exempted under national or state insolvency laws. This can only be cleared with a bankruptcy attorney who will check the property immunities applicable where one lives, in order to determine if this possibility is valid.

Chapter 13. Individual Debt Adjustment

Chapter 13 Bankruptcy offers eligible debtors the choice of a type of loan that will allow them to work with a competent court-appointed bankruptcy trustee in order to come up with a plan to repay the creditors. This means that, instead of conceding one’s property, his or her future income will be used, following a plan of two to, maximum, five years, to pay off the debts. The debtor will reimburse a proportion of what is owed in smaller increments, regularly, to his or her trustee, who will then dispense it to the creditors. At the end of this plan, one’s debts are cleared.

Important Bankruptcy Benefits

When one files for bankruptcy under either of the two chapters it means that, automatically, most collection activities against the mortgagor as well as his or her belongings are stopped. This also means that creditors cannot follow legal action, get wages or pay phone calls in which they ask for their payments to be delivered. Furthermore, Chapter 13 states that a programmed stay can halt foreclosure actions, allowing the debtor to continue making appropriate debt expenditures and bring overdue expenses to date. The bankruptcy rules in the same chapter also serve protecting the co-signers from the accountability of credits or possessions subject to the obligation modifications.

What Help You Can Receive When Filing for Bankruptcy

Bankruptcy lawyers represent the people one needs to talk to when wishing to file for bankruptcy, as they are trained to give the right advice for each case. Following the recent changes in the bankruptcy law, a lawyer will go with the debtor through his or her rights, clearly describing the potential outcomes of the respective bankruptcy case. A bankruptcy attorney is highly recommendable anyway, no matter under what chapter one decides to file for bankruptcy. I’ve had personal experience with MyBKHelp Bankruptcy Lawyer and can highly recommend them.