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For starters, bankruptcy is an effective way to temporarily halt all collection efforts being done by creditors. The bankruptcy court is the issuing authority and an appeal for a relief may be filed by the creditors, if they want to continue with the collection. However, if your debt is secured by a property, creditors are often allowed to gain possession of the said property.
The job of the bankruptcy court is to determine whether you are indeed bankrupt and have no way of paying your outstanding debt. All your finances will be scrutinized including your assets. If you filed under Chapter 7 or liquidation and yet the court found a way in which you can pay off the debt, then you will be approved for a Chapter 13 bankruptcy. This type of bankruptcy allows the petitioner to pay off his creditors under a repayment scheme that is reasonable to both parties and based on the petitioner's paying capability. All assets are still in the petitioner's possession. On the other hand, if the court decides to grant the Chapter 7 petition, all debts will be forgiven. Although the petitioner is given a new lease on his financial life, all his assets will be turned over to a trustee who will be in charge of the sale of the assets as well as the distribution of the proceeds to all creditors. However, certain debts will have to be paid even if the bankruptcy petition was approved. These include student loans, child support and taxes. Since, Chapter 7 and Chapter 13 bankruptcies have been discussed; you might be wondering which is best for your circumstances. You should just remember that in liquidation, you are allowed to file once for every seven years. Your creditors can no longer stake a claim on your future earnings once the bankruptcy petition has been approved. On the other hand, repayment schedules for Chapter 13 should be within three to five years. Even if there is a plan to pay off the debt over time, the bankruptcy will still be there on your credit report. This could really affect your credit score, significantly lowering it. Many creditors do not consider bankruptcies as a reason to reject a person's loan application. In fact, some creditors will overlook this negative entry on your credit report and grant your loan. However, this comes with certain terms and conditions. In most cases, the loan will have a limited credit line as well as higher-than-industry-standard interest rates. Applying for a housing loan is said to be easier for people who were declared bankrupt compared to applying for car or personal loans, because the loan will be secured by the property. Learn how to Delete Bankruptcies from your credit report from Credit Expert Frank Bruno: http://www.DisputeDemon.com |
