Cc Brown Law Office - Debt Annihilation With Bankruptcy

CC Brown Law: After the cruel blow of recession and global economic crisis

, bankruptcy has become a household name. The current economic turbulence has prompted a number of people to file for bankruptcy. In the recent years, the social stigma is no longer attached to bankruptcy and it has evolved significantly as an effective debt solution. In spite of this fact, we often feel hesitant to file for bankruptcy and feel confused whether bankruptcy debt relief is an ideal way to ensure financial freedom or not. If you have similar queries in your mind, read on to clear your mist about bankruptcy.

Bankruptcy

Bankruptcy is governed under federal law. It is a legally declared inability of an individual or a business organization to pay off the outstanding debt. Mostly the debtors declare bankruptcy when they have no other way to pay off their debt or when in order to retrieve some portion of their losses creditors sign petition and force them to declare bankruptcy. Consumers, who find it simply impossible to repay their debts, can consider making a financial fresh start with bankruptcy.

Limitations

Its true that declaring bankruptcy can instantly relieve your financial woes, but its certainly not without enforcing some major financial restrictions. Bankruptcy is a deathblow to your credit scores and mess up your credit completely for long 10 years. You are not allowed to file for another bankruptcy for another 6 years. As the three digit number of your credit score, which ultimately shows your creditworthiness before the creditor, gets potentially hurt in bankruptcy, you no longer apply for future loans from banks or other lending institutions. In spite of all these pitfalls, bankruptcy debt relief definitely can put an end to your financial problems. Read on to know how.

Chapter 7

It is the most easily comprehensible and common type of bankruptcy. Well, Chapter 7 bankruptcy is suitable for those who dont have a regular mode of monthly income and their miserable financial condition prevents them from repaying their outstanding debt. Under Chapter 7 bankruptcy, your credit card debt is expunged by the court and almost all other debt gets discharged. A court generally appoints a trustee who liquidates your non-exempt assets and disburses the money among your creditors. They can foreclose your automobiles, home, place of business and even personal items such as jewelry and can sell them to recover the debt amount as well. The remainder debt which can not be covered up through the liquidation is generally eradicated by the lenders. Regardless of whether the debtor is individual or corporations or partnerships, all are eligible for chapter 7 bankruptcies.

Chapter 13

If you have a regular and steady cash flow and your unsecured debt are more than $ 250,000, you can go for chapter 11 bankruptcies. Under chapter 11 bankruptcy, the court allows the debtor to submit a debt repayment plan, depending upon their income. Chapter 11 is known as rehabilitation bankruptcy and it is primarily being used by business debtors, who like to maintain their ownership, even while striving to work out a reformation plan to pay off their creditors. Under Chapter 13 you can restructure your unsecured debts like credit cards and your secured debt like a home loan and can pay it down over a three- to five-year period. Here none of your assets are sold off by the court to pay back your debts. As long as you make payments on your court approved debt repayment plan in a timely manner, your creditors are neither allowed to take any action nor can they reclaim your assets. In chapter 13 at the end of your repayment term, the remaining debts are discharged by the court. Its comparatively easier to rebuild your credit rating after chapter 11.

To conclude, its fairly possible to restore your financial freedom via bankruptcy debt relief. Remember, its highly recommended to seek assistance from proper bankruptcy counseling services or a bankruptcy attorney, before opting for a bankruptcy debt relief plan.

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