Bankruptcy And Debts

When a petition for bankruptcy is filed, it is as if the petitioner is saying to the bankruptcy court, "Here are all of my possessions, you figure it out." This is called a chapter 7 bankruptcy. (Chapter 11 and Chapter 13 bankruptcies involve the petitioner creating a plan to pay the creditor's back, and is a different breed of cat.) A trustee is appointed to represent the petitioners' creditors and divvy up the petitioners assets among those creditors. If a states homestead law says that a certain amount of the petitioner's equity in his home cannot be used to satisfy certain debts, the trustee cannot use that equity to pay off creditors. The court is in no better position than the creditors would be. Thus, when the trustee allows the exemption of the petitioner's property, the trustee is saying that whatever equity the petitioner has in his home is protected by the petitioners declaration of homestead. If state law allows a $45,000 homestead, the exemption is $45,000. If the state has a $50,000 limit, the exemption is limited to $50,000 and so on.

Consolidation Debt Mortgage The trustee also has the right to determine that a piece of property has too many liens or encumbrances. In this case, the trustee can abandon the property. If the property is exempt or abandoned, it is no longer subject to the bankruptcy, although the petitioner may still benefit from the protection of the automatic stay which prevents anyone from bringing an action against a petitioner while the bankruptcy proceeding is pending.

Chapter 13 bankruptcy allows an individual to pay off his debt over time. The process starts when the individual files a petition with the bankruptcy court. This petition includes a complete list of all the individual's debts and assets. Additionally, the petition must include a payment plan that describes how the debt will be paid off over the next three to five years.

Consolidation Debt Help After the petitioner's property has been divided among the petitioner's creditors, and those debts which can be satisfied have been satisfied, the petitioner is discharged. This means that the creditors cannot look to the petitioner for payment of any remaining debts. This discharge of the petitioner has nothing to do with the petitioner's property. State law determines the effect of any liens recorded against the petitioners property.

Bankruptcy is a court process that allows an individual or business to get relief from their debts. The ultimate goal of bankruptcy is to give the individual or business a fresh financial start while being fair to creditors. How Can a Business File for Bankruptcy Chapter 7 and Chapter 11. Once bankruptcy proceedings are started (whether through Chapter 7 or Chapter 11), creditors cannot attempt to collect debt from the business until the bankruptcy process has ended.

Consolidation Credit Debt The effect of all this is that if property is deemed exempt or abandoned or if the petitioner is discharged and retains title to the property, any recorded liens are still attached to the property and must be reckoned with. In most instances whatever equity the petitioner has in the property will be protected by the declaration of homestead. Had the equity exceeded the amount of equity protected by the homestead, the trustee would have probably used it to satisfy the creditors. Excess equity (or property upon which a homestead cannot be declared) is the usual reason that the trustee will ask the court to authorize the sale of the property free and clear of existing liens. The free and clear part is intended to make the property more attractive to a potential buyer, assuring the highest price and getting the most money to satisfy the greatest number of creditors.

When you declare bankruptcy, you are taking an official legal action — essentially saying, "I cannot repay all of my outstanding debts and want to make a fresh start." Unfortunately, a Chapter 13 bankruptcy filing will remain on your credit record for at least seven years, and Chapter 7 bankruptcy filings can stay there for 10 years. Either of these bankruptcy filing can affect both your credit score and how lenders perceive your credit worthiness.

Bill Consolidation Debt Remember, a bankruptcy relieves the discharged petitioner of his debts. It has no effect on the petitioner's property. Unless the bankruptcy court decides otherwise and issues an order removing the lien of existing encumbrances, the property is still subject to the effect or recorded liens under state law.

Personal bankruptcy can be loosely defined as a legal proceeding where you essentially say, "I can't pay my debts." From there, you file paperwork in Bankruptcy Court to support that claim. And although there are six types of bankruptcy, the two most commonly filed for by individuals are Chapter 13 (reorganization) and Chapter 7 (liquidation). Filing bankruptcy is a personal choice, but it's not always the right choice for everyone.

Consolidation Debt Quote By John E. Roush, Broker-Owner Atrium Real Estate Investments. John is a full-time real estate agent specializing in real estate investment and real estate investment education. To contact John send all correspondence to Johnr@investorloft.com © 2005 www.InvestorLoft.com

The newüct contains the biggest changes to bankruptcy law in 25 years. The law makes it more difficult for people to have their debts discharged under Chapter 7 bankruptcy, bankruptcy credit counseling. All of those people who are barred under the new law from filing Chapter 7 will be forced to file Chapter 13 bankruptcy, which requires a payment plan over a period of years instead of giving a fresh start.

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