ALL >> Legal >> View Article
Is Bankruptcy A Viable Option?
Sometimes in your lives you encounter a situation where you are no longer able to pay debt bills. At such times you do consider bankruptcy as a way out. Bankruptcy is a process when a person legally declares himself unable to pay outstanding debts.
This term has its origins in the sixteenth century during the time of Henry VIII in the United Kingdom.
Personal bankruptcy is considered the last resort in debt management. Bankruptcy has a long standing effect on your credit report. It becomes difficult for the next ten years to get a credit, house loan, insurance and sometimes even a job. This option works out for people who have no ability at all to repay the debts they owe. After this they can start a new life.
There are two major types of Bankruptcies - Chapter 7 and Chapter 13.
In both the above bankruptcies, you may get rid of unsecured debts such as credit card debts, utility shut offs, wage garnishments and repossession of vehicles. In both types of bankruptcies, you get to retain certain assets like taxes, child support money, alimony etc. If you have a plan to repay under Chapter 13, you ...
... are allowed to keep property on which your creditor has an unpaid mortgage. A valid payment plan and a capacity to repay ensure you keep the assets.
Bankruptcy for married people or couples and businesses is Chapter 7 bankruptcy. Businesses may file under chapter 13 bankruptcy.
Once either an individual or business file for bankruptcy, they expect a clean record henceforth. If a business opts for a Chapter 7 bankruptcy, it is expected to close down the business after this. Individual opting for Chapter 7 bankruptcy risk losing most of their assets except primary vehicle or home. If the debtor has a loan for vehicle or home and he cannot repay, he has to lose it also.
For individuals, Chapter 7 bankruptcy entails that the courts declare the individual unable to pay debts incurred, and almost all debts are declared void. Certain federal debts, like student loans, still exist even after declaring bankruptcy.
While filing for Chapter 7 bankruptcy, you must list all the assets you have. Barring the primary vehicle and home, all other assets like second house, vehicles and collectibles are liquidated to pay the creditors. In this kind of bankruptcy, the debtor loses only those assets that are not so much in use and he can afford to lose them. The advantage he gets out of this is all his unsecured debt like medical bills, credit cards bills etc get wiped out.
Chapter 13 bankruptcy is used by people who have large assets but their income was just not enough to cover their huge debts. In these cases the debtor gets to keep his assets but his payments are restructured by the court. Payments restructured by the court should be paid in time lest you lose the assets.
Bankruptcy though gives you debt relief, is a very costly proposition in that your credit report carries a black mark for ten years. The result would be, it will be extremely difficult to get approval for credit cards, home loans etc after this.
Add Comment
Legal Articles
1. Bail Lawyer In Cyber Crime Case In Delhi – Advocate Deepak: Your Trusted Legal PartnerAuthor: Advocate Deepak
2. Chicago Personal Injury Lawyers
Author: Paul M. Marriett
3. The Bruner Law Firm
Author: Vince Bruner
4. Bail Lawyer In Cyber Crime Cases In Noida: Advocate Deepak
Author: Advocate Deepak
5. The Journey Of Lady Advocates In Chennai's Male-dominated Field
Author: Sonu Kumar
6. Best Cyber Crime Lawyer In Ghaziabad – Advocate Deepak
Author: Advocate Deepak
7. Revealed: Secret Strategies To Dominate Government Sales On Gem!
Author: Bidz Professional
8. What To Look For In An Experienced Ri Divorce Lawyer
Author: John Grasso
9. Everything You Need To Know Before Investing In Saudi Arabia
Author: jodonjo
10. Spousal Alimony In California: What It Is And How It's Decided
Author: Thomas D. Nares
11. Balancing Investor Protection And Industry Growth: Sebi Lawyers' Take On Investment Advisers’ Reforms
Author: Dev kumar
12. "transparent Processes: Building Public Trust Through Stringent Pcc Attestation Measures"
Author: shareeba
13. How To Open An Llc As A Saudi
Author: jodonjo
14. Navigating The Road To Recovery After A Minneapolis Truck Accident: Why A Local Attorney Is Key
Author: sussmanlaw
15. Uk Spouse Visa Explained: How To Join Your Partner In The Uk
Author: The SmartMove2UK