CC Brown Law – Consequences of Bankruptcy on Joint Property
CC Brown Law Consequences of Bankruptcy on Joint Property
The Bankruptcy is usually the last step of an individual,which takes on repairing the extremely negative financial crisis. When an individual, can no longer pay creditors or the creditors for a certain length of time and to those creditors are attempting to collect and going so far to threaten the prosecution which is seriously considered as the option of bankruptcy.
The purpose of Bankruptcy is to find relief for both the debtor and the creditor. The bankruptcy law provides a way for the debtors to either repay their debts or to receive the relief from an insufferable to repay the debts while at the same time providing the creditors a way to receive the payment for their loans. Mostly, all the bankruptcy laws are governed under the Title 11 of the United States Code and are uniform throughout the states in regard to the available options for relief.
In the case of Individuals and married couples who file bankruptcy there are two options available under the law. The first is referred to as Chapter 7 and it basically offers the following in terms of relief to the debtor.
The Liquidation of non-exempt assets to be sold by a trustee who will distribute the proceeds to the debtor's creditors for repayment within four to six months after filing for bankruptcy.
The debtor is allowed exempt assets where they keep in order to start his financial life over again.
Many debts may simply be forgiven if the debtor doesn't have sufficient non-exempt assets in which to cover them.
After the discharge of the bankruptcy, most of the wages earned by the debtor are to keep and they cannot be used to further satisfy the creditor's expectations of relief.
The second option for individuals considering bankruptcy is referred to as Chapter 13. Their debt is restructured by the debtor and a court appointed trustee which allows them:
To keep their property and make regular payments to the trustee over a given period of time, usually between three to five year.
To discharge certain debts that cannot be discharged under Chapter 7.
The Options that help to prevent the repossession and foreclosure as they follow a newly organized plan of repayment.
When one spouse files for bankruptcy, there are certain consequences which affect the other spouse. There is an "automatic stay" which goes into effect right after filing. This prevents creditors from attempting to collect from the debtor until the bankruptcy is discharged. This is designed to give the debtor relief from losing his property, being sued or having his wages garnished. However, this does not fully cover the non-filing spouse if both are jointly liable for the debt. Creditors can attempt to collect from the spouse, unless the spouse filed under Chapter 13.
The marriage contract does not mean that all contracts signed by either spouse become jointly enforceable on both marriage partners. The Home loans and credit card agreements are legally binding only between the parties who have signed and contracted together. Only the marriage partner who has signed the contract is liable for its repayment, and therefore, if he ever files for bankruptcy, the non-filing spouse cannot be sought by the creditor for relief.
In the case of jointly owned property, it is usually the case that the property becomes part of the Bankruptcy estate," In community property jurisdictions, both halves of the community property fall under the definition of "bankruptcy estate" even if only one spouse has signed the contract regarding the property. However, in such a case, both spouses are protected during the "automatic stay" period and any property they purchase after the discharge of the bankruptcy is also protected from future attempts at collections.
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