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.
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.
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.
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.
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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