By: Bovemsa Cheung
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Homeowners never want excessive debt or foreclosures. This is why sometimes bankruptcy is a good solution; however it is bad at the same time because it ruins your credit score. Another problem is that the bankruptcy laws passed in 2005 makes it even more difficult to file for bankruptcy.
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Homeowners never want excessive debt or foreclosures. This is why sometimes bankruptcy is a good solution; however it is bad at the same time because it ruins your credit score. Another problem is that the bankruptcy laws passed in 2005 makes it even more difficult to file for bankruptcy.
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When people no longer have the financial capacity to pay their lenders—they turn to bankruptcy. Declaring bankruptcy is the only legal way to lift financial burdens off your shoulders. However filing for bankruptcy is a complicated process. You have to explain to a bankruptcy trustee or judge how you got into this financial situation. The bankruptcy court also asks you to file an entire list of assets and outstanding debts with them. The assets are divided into exempt assets and non-exempt assets and outstanding debts are divided into secured debts and non-secured debts. After doing all the paperwork, the bankruptcy trustee makes sure that all secured debt are repaid within a specified period and the court issues a mandatory ‘stay’ which prevents creditors from property confiscation , foreclosure, or filing a lawsuit against you.
When people no longer have the financial capacity to pay their lenders—they turn to bankruptcy. Declaring bankruptcy is the only legal way to lift financial burdens off your shoulders. However filing for bankruptcy is a complicated process. You have to explain to a bankruptcy trustee or judge how you got into this financial situation. The bankruptcy court also asks you to file an entire list of assets and outstanding debts with them. The assets are divided into exempt assets and non-exempt assets and outstanding debts are divided into secured debts and non-secured debts. After doing all the paperwork, the bankruptcy trustee makes sure that all secured debt are repaid within a specified period and the court issues a mandatory ‘stay’ which prevents creditors from property confiscation , foreclosure, or filing a lawsuit against you.
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Under the bankruptcy law, there are two types of bankruptcy, Chapter 7 and Chapter 13. Chapter 7 bankruptcies are generally chosen by people with lower income, fewer assets, and more debts. The Chapter 7 bankruptcy option is generally chosen by people who are interested in keeping their non-exempt property intact or people who want to buy time against foreclosures or property seizures. There is a test to see whether you are eligible for Chapter 7 or 13 bankruptcies.
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Bankruptcy can stay on your credit report for as long as 10 years, depending on the chapter chosen. This affects getting a loan, mortgage, or a credit card. Consulting with a trustworthy bankruptcy attorney may be helpful in making this vital decision of filing for bankruptcy.
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Sources:
1. http://www.investopedia.com/articles/pf/07/bankruptcy.asp
2. http://www.lawhelp.org/documents/74261bankruptcy.html?stateabbrev=/az/
3. http://www.moranlaw.net/consider.htm
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Sources:
1. http://www.investopedia.com/articles/pf/07/bankruptcy.asp
2. http://www.lawhelp.org/documents/74261bankruptcy.html?stateabbrev=/az/
3. http://www.moranlaw.net/consider.htm
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