What You Should Know About Bankruptcy
Filing bankruptcy is not only a last resort legal action; it is also a
very complicated legal action that definitely needs the expertise of a
lawyer. When thinking about bankruptcy, you first need to decide if
bankruptcy is right for you. If it is, then you need the help of an
attorney to decide which type of bankruptcy is required for your
particular situation.
The decision to file bankruptcy can be brought on by many different
circumstances. The most common circumstances are divorce, medical
hardships and credit card troubles. In cases of divorce, bankruptcy is
often inevitable. The sudden change in financial level and the added
burden of court costs, extra expenses and child support often cause one or
both parties to get behind on their financial obligations.
In the case of medical hardships, high medical bills can sometimes
overburden people even if they have insurance. This is even more likely to
happen if the person experiencing the medical emergency is also the family
breadwinner.
The most common case of financial hardship is incredibly high credit card
balances. After carrying numerous high credit balances for a certain
period of time, many people find themselves unable to make anything but
the minimum payment and sometimes not even being able to make that. Then,
when the high interest rates are added in, people find themselves in a
situation where repayment is often impossible.
Whether your situation arose from one of the above financial problems or
not, sometimes bankruptcy is the only answer to your monetary problems.
Once you have decided that bankruptcy is the answer for you, you will need
to enlist the services of a lawyer to decide which type of bankruptcy to
file and to help you navigate the many complex bankruptcy laws and
regulations.
There are four main types of bankruptcy, Chapter 7, Chapter 13, Chapter 11
and Chapter 12. Chapter 7 is the most common form and can be used by
businesses and individuals. Chapter 13 is the second most common form, but
it limited to use by individuals only.
In a Chapter 7 bankruptcy, a debtor's property is divided into to
categories, exempt and non-exempt. Exempt properties include things that
the debtor will be allowed to keep like their home and automobile. In the
case of exempt properties, the debtor is allowed to keep them as long as
he or she continues to pay for them. If a person cannot continue to make
payments, the owner of the loan may repossess the property, even after a
bankruptcy has been finalized. Any non-exempt or unsecured property will
be sold to cover the debtor's financial obligations. Debts such as credit
card debts and medical bills can be written off with this type of
bankruptcy, but other debts like school loans and taxes cannot be.
In Chapter 13 bankruptcy, the debtor is required to come up with a way to
repay his or her debts, but these debts usually do not have to be repaid
in full. In most cases, a creditor will agree to take a small percentage
of the owed debt as opposed to losing all repayment all together. This
form of bankruptcy is preferable for those individuals that wish to keep
all of their possessions and just need a chance to catch up on their
financial obligations. It does not, however, excuse a debtor from priority
debts like taxes and child support.
In order to qualify for Chapter 13 bankruptcy, an individual must have a
yearly income level that allows for repayment of each of his debts within
three to five years. After three to five years of consistent repayment,
the debtor's obligations are released.
After you have researched bankruptcy and decided that it is right for you,
you need to contact an attorney that specializes in bankruptcy to help
assure that you follow all legal guidelines and are protected from further
collection activity.
You can find a bankruptcy lawyer in your home city at Lawyer Vista
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