News About Chapter 7 Bankrupt

Jul 11th, 2014 | By | Category: Info

Only a few years ago, Congress made multiple huge changes to the bankruptcy laws which impacted how bankruptcy would be filed, and even who is eligible. For example, no longer can you file bankruptcy just because you’re tired of paying your bills, but under the new laws, there’s a defined set of procedures that must be observed for each chapter being filed, and your financial status will be evaluated under a microscope, where you must be approved before you can even file.

But one of the topics that was left pretty much untouched by the great variety of changes was Chapter 13 Bankruptcy. This chapter was originally constructed in order to avoid a home from being put on the foreclosure block. But with the massive number of foreclosures that are happening in the US today, it is an unfortunate fact that many people still don’t know that Chapter 13 Bankruptcy filing can still be used in order to prevent foreclosure on their home.

For the average consumer, there are three different types or chapters of bankruptcy that may be available to them, in accordance with their specific circumstances. The first one is Chapter 7 Bankruptcy. This is the most frequent type and is also sometimes referred to as a liquidation. Obviously the reason it is referred to as liquidation is because the majority of their debt is discharged by allowing the court-appointed trustee to liquidate all of their non-exempt assets. Even with this chapter, however, be aware that there are some types of debts that cannot be discharged by going bankrupt.

Although it used more appropriate to be employed by either businesses or people with substantial assets and income, another type of bankruptcy available to the consumer is Chapter 11, frequently also referred to as a business reorganization. This type doesn’t wipe out debts, but rather it enables the person or business to reorganize its debt structure and make revised payments to the creditors, sometimes over a long period of time, and sometimes also with a reduced interest rate. Creditors usually are prepared to do this, since collecting their money over time and with interest is surely better in their view than to dispose of the debt wiped out completely via a different chapter.

The last type or chapter of bankruptcy available to the consumer is Chapter 13, frequently also referred to as the Wage Earner’s Reorganization. This type is the least expensive to file and is often used by consumers who still maintain their capacity to make their payment obligations, normally within three to five years. The total amount of their assets which are classified as non-exempt is served as a basis and guideline for the amount that must be repaid over this period of time, as well as considering their level of income and any debts which cannot be discharged.

Just Chapter 7 Bankrupt

But what many consumers don’t realize is that Chapter 13 Bankruptcy also allows property owners to stop foreclosure proceedings if they’re behind on their mortgage payments. While the same can be stated for the other chapters of consumer bankruptcy, Chapter 13 is particularly designed to allow the consumer to pay the delinquency in equal monthly payments for as long a period of time as 60 months (5 years). The mortgage lender has no alternative but to agree to this, as long as all the other conditions and qualifications of the present chapter are met.

The procedure to be qualified to file this section is more rigorous than the others, since it involves a detailed examination of total debt and total income. No chapter of bankruptcy is any longer consider to be a ‘do-it-yourself’ process with all the new regulatory requirements in place, so regardless of what chapter you’re thinking about, it is highly recommended that you consult with a qualified bankruptcy lawyer and ensure that you and your property, combined with your specific situation, actually do qualify.

Most types of personal bankruptcies for individuals are made under the three main chapters of the Bankruptcy Code-Chapter 7, Chapter 11 and Chapter 13. Only the federal courts have exclusive jurisdiction over bankruptcy cases. These mean that it cannot be filed in a state court. Filing Chapter 7 bankruptcy allows the debtors to wipe down many debts by selling their secured assets and property to reimburse the creditors. Chapter 13 allows the debtors to repay the amount in better terms, I.e. lower or no interest for whom a time-period of three to 5 years is granted. Chapter 11 bankruptcy allows a firm the chance to reorganize its debt to stay intact in the company and pay their debts through money earned in business.

The biggest benefit that you can get with Chapter 13 bankruptcy, if you qualify and if you’re facing foreclosure proceedings, is that it buys you time. That time can serve to make your current financial situation better, or it can also serve to find the right buyer for your property. If you go ahead with this, be borne in mind that the time you’re granted with this is finite, and you require to start planning and take action NOW.


Comments are closed.