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Bankruptcy |
| By: Tim S |
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The United States Federal Bankruptcy code was put in place to provide structure for two different underlying principles of the bankruptcy process. The foundation of bankruptcy is built on the belief that there should be a process for a normal person that is enduring an overly burdensome financial situation to go through and obtain a "fresh start." A complementary aspect of bankruptcy is to provide for orderly repayment on debt to creditors based on the individual's financial ability to repay that debt.
Debt is divided into 3 catagories for the purposes of bankruptcy. Secured debt is debt in which there is a piece of real property (collateral) that secures the loan by offering the creditor a method of recouping on a defaulted loan. Secured creditors offer a loan in lieu of real property ownership and they use repossession or foreclosure to ensure that they maximize the amount returned to them when a person defaults on the loan. Bankruptcy can prevent the repossession and foreclosure of your property. Bankruptcy filers that have had an automobile repossessed are eligible to have their property returned to them so long as they file within 10 days of the repossession.
The other types of debt are "priority" and "unsecured." Priority debt consists of governmental debt such as the IRS debt, back child support, and state taxes such as sales taxes for personal businesses. Unsecured debt is generally composed of all the debt which is non-governmental and is not secured by a piece of real property. Examples of unsecured debts are credit cards, medical bills, pay-day loans, repo deficiencies, broken leases, utility bills, and mailing services. While unsecured debt is the most common form of debt, it also is the easiest to discharge and usually receives the least amount of funds in a chapter 13.
While foreclosures may not be undone, they can be stopped by filing bankruptcy anytime prior to the foreclosure. Once a bankruptcy has been filed and a repossession has been stopped the individual must make a decision based on which type of bankruptcy the person has filed. In a Chapter 13 bankruptcy the individual will enter into a repayment program through the local bankruptcy Trustee to have the delinquency (arrearage), that created the loan default, paid back over a period of time. This same procedure applies to all secured debt that you wish to keep and you are behind on. It is possible for a person to surrender (give it back to the creditor) property at which point the lender will start the repossession proceedings through the bankruptcy court. It is important to note that the repossession process is not the same for people both inside and outside of bankruptcy. Inside bankruptcy the creditor wishing to repossess the property must go through a bankruptcy proceeding that usually results in further agreements between your attorney's office and the creditor.
The individual or individuals filing bankruptcy are termed the debtor and joint debtor in consumer bankruptcy. Generally the male of a household will be considered the debtor in a joint bankruptcy filing while the female is considered the joint debtor. Individual bankruptcy filing are allowed even when the person filing is married and is an option to consider for married couples thinking about filing bankruptcy. It might be in a married couple's best interest to file an individual bankruptcy if they were recently married and the majority of their debt is strictly in one person's name.
There are many factors and variables to consider when deciding whether bankruptcy is the right decision for you and your family. The chief concern in weighing these variables is to determine which bankruptcy filing would suit your situation best. A local bankruptcy attorney is the person best person to seek advise from when making a decision as to whether or not to file bankruptcy and if you choose to which chapter would suit your needs. One website that offers help in finding a bankruptcy lawyer anywhere in the United States is www.bankruptcyhome.com |
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Original content from bankruptcyhome.com
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