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Bankruptcy is the last resort or an emergency number, which should be the last option in case of emergencies. Many people, for various reasons, more so during the pandemic era, are forced into debt. It may be due to excessive medical expenses or due to other uncertainties like job loss or business losses. Some people, due to poor management of finances and over-the-top expenditure beyond what they can afford, spoil their finances and fall into the debt trap. No matter what the reason or concern may be, bankruptcy is relieving from a grieving situation.
To begin with
Bankruptcy, like most government procedures, requires meeting a few eligibility tests, understanding the application process, collating information, and filing all the documents with the respective authorities. This process might be easy but help from experts on https://recoverylawgroup.com/bankruptcy/ can make life easier by a ton. There are different options that one can consider, Chapters to be precise, either chapter 7 or chapter 13 or chapter 11. Dial 888-297-6203 to know more about each chapter and its advantages and drawbacks specific to your scenario.
Consequences
After learning how to get started with bankruptcy, it is important to know what the end game might be. Bankruptcy is not going to give a guaranteed happy ending as there is a trade-off between assets or future liabilities. If you have a consistent running income and you are willing to assume future liabilities, then you should end up safeguarding all your assets with most of your unsecured debt discharged. On the other hand, if you do not have consistent income and you cannot afford a future liability, then the assets might be liquidated and the loans which cannot be settled by the liquidation of assets might be discharged.
However, the process leaves certain scars on credit scores and the ability of a person to get credit in the future. The scars remain valid for even up to 10 years. Hence, it is important to make as much effort as possible to avoid bankruptcy.
Bankruptcy glossary
Below are a list and meaning of some common bankruptcy terms you might come across-
- Bankruptcy trustee – A trustee is an appointed person who, if need be, resolves any conflict by doing adequate research and helping arrive at a consensus between the borrower and the lenders. The trustee might have different roles to play based on the chapter under which bankruptcy is applied
- Credit counseling – This is an important aspect of bankruptcy that is aimed at departing financial learning to the borrower. This can be done before declaring bankruptcy. The certification received from credit counseling might be a mandatory formality to complete the bankruptcy documentation process
- Lien – Lien is legal authority to the lender or a creditor to assume ownership of a specified asset in possession of the borrower in case of non-payment of EMIs or defaults.
- Liquidation – Sale of an asset or initiation of sale of an asset to clear lender debt is referred to as liquidation. It is more apt for applicants filing for bankruptcy via Chapter 7.
- Re-affirmed account – There might be some exception or scenario where, even after the discharge of a particular debt, the applicant might continue to pay the debt to retain or re-affirm a particular asset. This is a rare scenario and is usually seen with respect to a car or an emotionally valuable asset that has been liquidated during the discharge process
Learn much more about bankruptcy and avail personalized consultation if you are in and around Los Angeles and Dallas, TX at affordable costs. Just dial 888-297-6203.