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.
It is possible for any type of debt consumer to apply for bankruptcy. Individual consumers can declare bankruptcy to have their credit card debts, personal loans and other debts written off. Businesses, companies and partnerships can also file for bankruptcy to have their business debts written off. It is important to note, however, that any legal entity that files for chapter 7 will be wound up, so that will be the end of their existence.
Chapter7 entails liquidation of property belonging to the debtor. The proceeds are used to pay off all outstanding debts that are part of the bankruptcy proceedings. In return, the balance between the debts and proceeds of the sale will be forgiven. Furthermore, creditors get to claim a tax deduction on the loss they suffer due to the bankruptcy.
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.
Bankruptcy might have many benefits, but it also has some shortcomings. For one, your credit report will have a bankruptcy entry, thereby preventing you from securing affordable credit. This may also prevent you from getting a great job in the financial sector because you will be considered financially incompetent. The bankruptcy will also be public knowledge, which means that some people might know about your predicament.
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.
There are some debts that can never be written off. The first is your student loan debt. This can only be written off when you die. Child support and spousal support payments can only be modified by a family court, so they cannot be written off.
It is possible for any type of debt consumer to apply for bankruptcy. Individual consumers can declare bankruptcy to have their credit card debts, personal loans and other debts written off. Businesses, companies and partnerships can also file for bankruptcy to have their business debts written off. It is important to note, however, that any legal entity that files for chapter 7 will be wound up, so that will be the end of their existence.
Chapter7 entails liquidation of property belonging to the debtor. The proceeds are used to pay off all outstanding debts that are part of the bankruptcy proceedings. In return, the balance between the debts and proceeds of the sale will be forgiven. Furthermore, creditors get to claim a tax deduction on the loss they suffer due to the bankruptcy.
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.
Bankruptcy might have many benefits, but it also has some shortcomings. For one, your credit report will have a bankruptcy entry, thereby preventing you from securing affordable credit. This may also prevent you from getting a great job in the financial sector because you will be considered financially incompetent. The bankruptcy will also be public knowledge, which means that some people might know about your predicament.
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.
There are some debts that can never be written off. The first is your student loan debt. This can only be written off when you die. Child support and spousal support payments can only be modified by a family court, so they cannot be written off.
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