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.
Any type of debtor can apply for this type of bankruptcy. This includes individual consumers who have a lot of unsecured debt they are not able to service. Business owners can also use this option to get rid of their debt burden. However, this will lead to wounding up of the business. Companies, partnerships, charities and every other type of legal entity that is allowed to borrow can also use this option.
This bankruptcy option basically involves liquidation of assets belonging to the debtor. Anything of value will be auctioned off to recover funds that will be used to pay off the creditors. In return, the difference between the proceeds of the sale and the outstanding debts will be written off. Creditors will also get a chance to have all the losses associated with debt forgiveness written off.
The main goal of declaring bankruptcy is to get legal protection from creditors. Once the paperwork has been filed in court, creditors will be automatically barred from making any communication with you. On the other hand, creditors get the chance to resolve their bad debts book and claim their deductions. As you can see, this option has many benefits.
When considering bankruptcy, it is crucial you keep some things in mind. For one, you should know that your credit rating will suffer when you are declared bankrupt. You may not be able to borrow a loan or get a low interest credit card for up to seven years. Furthermore, renting a house or getting a job in the financial sector will become next to impossible due to your perceived financial irresponsibility.
Some debtors may not qualify for this option. For instance, if you have a huge monthly income, debt reorganization may be recommended as opposed to liquidation. This means that you would have to come up with a plan to offset your debts in several monthly installments. If you do not qualify for this option, chapters 11 and 13 may be recommended for business and individual debtors respectively.
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.
Some debts cannot be written off. For instance, if you are late on your student loans, you just have to find a way to pay it off. There is no way around it. In fact, only death can absolve you of the debt. Child support payments and spousal support payments must also be paid regardless of your financial status. Before hiring a lawyer to help you file for bankruptcy, you should remember that not all debts will be written off.
Any type of debtor can apply for this type of bankruptcy. This includes individual consumers who have a lot of unsecured debt they are not able to service. Business owners can also use this option to get rid of their debt burden. However, this will lead to wounding up of the business. Companies, partnerships, charities and every other type of legal entity that is allowed to borrow can also use this option.
This bankruptcy option basically involves liquidation of assets belonging to the debtor. Anything of value will be auctioned off to recover funds that will be used to pay off the creditors. In return, the difference between the proceeds of the sale and the outstanding debts will be written off. Creditors will also get a chance to have all the losses associated with debt forgiveness written off.
The main goal of declaring bankruptcy is to get legal protection from creditors. Once the paperwork has been filed in court, creditors will be automatically barred from making any communication with you. On the other hand, creditors get the chance to resolve their bad debts book and claim their deductions. As you can see, this option has many benefits.
When considering bankruptcy, it is crucial you keep some things in mind. For one, you should know that your credit rating will suffer when you are declared bankrupt. You may not be able to borrow a loan or get a low interest credit card for up to seven years. Furthermore, renting a house or getting a job in the financial sector will become next to impossible due to your perceived financial irresponsibility.
Some debtors may not qualify for this option. For instance, if you have a huge monthly income, debt reorganization may be recommended as opposed to liquidation. This means that you would have to come up with a plan to offset your debts in several monthly installments. If you do not qualify for this option, chapters 11 and 13 may be recommended for business and individual debtors respectively.
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.
Some debts cannot be written off. For instance, if you are late on your student loans, you just have to find a way to pay it off. There is no way around it. In fact, only death can absolve you of the debt. Child support payments and spousal support payments must also be paid regardless of your financial status. Before hiring a lawyer to help you file for bankruptcy, you should remember that not all debts will be written off.
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