|Our afflictions are designed not to break us but to bend us toward the eternal and the holy. - Barbara Johnson|
Are You Suffering From Bankruptcy? Let's See Some Possibilities!
In the 21st century due to either the economic crisis or recession, many people have declared bankruptcy. They can't repay the loans and would like to wipe out their debts with the help of the federal bankruptcy court. This is considered an aid. But it is not only consumers who can file for bankruptcy, businesses also can. Natural disasters, crimes, accidents, unemployment or even health problems can cripple your bank account. The sad thing is that a careless financial action may lead to bankruptcy: Bad investments or even gambling can overwhelm your financial situation. There are three types of bankruptcies.
Straight Bankruptcy or Liquidation Proceeding
When there is no way to avoid bankruptcy, the debtor is permitted to keep a kind of property, but just an exempt property. All the non-exempt type of property goes to the court which will sell some of the assets and share out in cash to the creditors.
What are the differences between exempt and non-exempt properties? Exempt properties are household appliances, jewelry, vehicles, public benefits, pensions. Non-exempt properties are vacation homes, family heirlooms, bank accounts, bonds. It usually takes six months. Although bankruptcy sounds harmful, this type lets you keep most of your assets.
Chapter 13 Bankruptcy
In the second type of bankruptcy, Chapter 13, the debtor files a repayment plan with the bankruptcy court and proposes the method by which he/she will pay to the creditors. The sum which is to be paid depends on the amount the debtor owes, the type of the debt and the property that is owned. It takes usually three or five years. Here there is no need to give away your assets in order to discharge the debts. It is advantageous if you have problems paying off secured loans, because you can keep a non-exempt property. If you are a student and you have a student loan you can't repay, with Chapter 13 bankruptcy, you can pay it off over time.
Anybody can file for bankruptcy. If you file for bankruptcy, the bank will discharge all the debts. Dischargeable loans are credit cards, personal loans, business debts. Repossession deficiencies are included in the first type of bankruptcy. Non dischargeable loans are child support, criminal fines and restitution, student loans. In Chapter 13, the dischargeable debts are personal loans, credit cards, debts due to larceny, embezzlement. Non dischargeable are: home mortgage, debts for alimony, support obligations, etc.