Bankruptcy is a legal process that allows creditors to recover their debts and borrowers to offset their bad debts. There are different types of bankruptcies for different types of debtors. There are also strict rules and requirements that must be met for a consumer to be declared bankrupt. A chapter 7 Monterey residents should know, is the default bankruptcy option.
Not all types of debtors can apply for bankruptcy. There are strict rules that are meant to prevent consumers from abusing the legal tool. Both individual and corporate debtors can apply for this option. Basically, any type of debt consumer can apply for bankruptcy relief. It does not matter how big the debt is. A trustee is normally appointed by the court to supervise the process.
If you do not already know, a chapter 7 basically involves auctioning of assets belonging to the debtor. After the auction, the money collected is used to pay debts owed by the debtor. Any unpaid amount is written off or forgiven. In return, creditors get a chance to claim a tax deduction on the bad debt. It is a win-win situation for all.
After being declared bankrupt, the first benefit you will enjoy is automatic stay. This prevents creditors, collection agencies and other agents of the creditor, from communicating with you in any way. This means that you will have peace of mind. The main benefit enjoyed by creditors is the chance to resolve their loan books and get a tax deduction.
While bankruptcy may have numerous benefits for all the parties involved, there are also some adverse effects associated with the process. For instance, consumers can expect their credit rating to reduce considerably. This is because a bankruptcy entry will appear for many years. Whenever lenders, employers and landlords run a credit check, they will know about the bankruptcy.
It is important to note that some debtors may not qualify for bankruptcy. For instance, if you have a significant monthly income, you may not qualify. This is because creditors can recover more money through regular monthly installments than they would through liquidation of your assets. In such cases, a chapter 13 may be best suited for the case.
When filing the necessary paperwork, you would have to declare all your assets. You must also list all your debts and state your annual income. A trustee will go through your finances and decide whether or not you qualify. If you do, they will take over all your assets and set the date for the auction.
There are some debts that can never be written off regardless of the court you file your petition in. A great example is your student loan debts. Only death will lead to writing off of this debt. Child and spousal support payments must also be paid regardless of your bankruptcy status. You would have to seek an amendment to your divorce settlement agreement to have these removed.
Not all types of debtors can apply for bankruptcy. There are strict rules that are meant to prevent consumers from abusing the legal tool. Both individual and corporate debtors can apply for this option. Basically, any type of debt consumer can apply for bankruptcy relief. It does not matter how big the debt is. A trustee is normally appointed by the court to supervise the process.
If you do not already know, a chapter 7 basically involves auctioning of assets belonging to the debtor. After the auction, the money collected is used to pay debts owed by the debtor. Any unpaid amount is written off or forgiven. In return, creditors get a chance to claim a tax deduction on the bad debt. It is a win-win situation for all.
After being declared bankrupt, the first benefit you will enjoy is automatic stay. This prevents creditors, collection agencies and other agents of the creditor, from communicating with you in any way. This means that you will have peace of mind. The main benefit enjoyed by creditors is the chance to resolve their loan books and get a tax deduction.
While bankruptcy may have numerous benefits for all the parties involved, there are also some adverse effects associated with the process. For instance, consumers can expect their credit rating to reduce considerably. This is because a bankruptcy entry will appear for many years. Whenever lenders, employers and landlords run a credit check, they will know about the bankruptcy.
It is important to note that some debtors may not qualify for bankruptcy. For instance, if you have a significant monthly income, you may not qualify. This is because creditors can recover more money through regular monthly installments than they would through liquidation of your assets. In such cases, a chapter 13 may be best suited for the case.
When filing the necessary paperwork, you would have to declare all your assets. You must also list all your debts and state your annual income. A trustee will go through your finances and decide whether or not you qualify. If you do, they will take over all your assets and set the date for the auction.
There are some debts that can never be written off regardless of the court you file your petition in. A great example is your student loan debts. Only death will lead to writing off of this debt. Child and spousal support payments must also be paid regardless of your bankruptcy status. You would have to seek an amendment to your divorce settlement agreement to have these removed.
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