Bankruptcy Questions

Bankruptcy Explained?

•    Bankruptcy is a financial maneuver, which enables an individual or business entity to seekalleviation from massive debts incurred.

•    A financial resolution is offered in a bankruptcy filing through a restructuration or liquidation process. These options offerthose in debt to seek alleviation through the establishment of an alternative payment plan or the liquidation process—liquidation simply means that the debtor’s assets (their cars or mortgage) are sold off and the proceeds of the sale are then used to fulfill their debt obligations.
•    All bankruptcy claims are administered by the United States’ Federal Government. That being said, each claim is filed through the federal court system that oversees theunderlying jurisdiction.
•    Individuals and business entities who file bankruptcy do so to free themselves from the constraints of creditors who perpetually seek repayment. Through the inclusion of a government agency, those individuals and entities struggling with debts can reorganize their debt structure by supplying incremental payments to their creditors.
•    Entities have a number of filing option; the most common of which being: A chapter 7 filing, a Chapter 11 filing, and a Chapter 13 filing.

Bankruptcy Questions

•    Does Filing for Bankruptcy Affect my Credit Rating?
Entities filing for either a Chapter Seven bankruptcy or a Chapter 13 reorganization petition will experience an alteration to their respective credit ratings--The extent to which the rate fluctuates and the intricacies involved are dependent on a number of factors. The most substantial factor associated with credit ratings is the underlying debtor’s credit score at the time their bankruptcy filing was initiated. If their credit score is near perfect, the rating after bankruptcy will be impaired; however, if the credit score was low, filing for bankruptcy will actually improve the score.
•    Am I Protected from Repossession
Repossession occurs when a creditor seizes assets as a result of the consumer’s inability to meet the loan obligations attached. A creditor’s ability to execute a repossession will depend on whether the loan was secured or unsecured. If the buyer fails to repay a secured loan (the goods purchased can be used as collateral i.e. cars or mortgages) the creditor has the ability to repossess the goods associated. If the debtor fails to repay an unsecured loan (credit card or medical bills) the creditor cannot repossess the underlying assets.

•    Can Filing for Bankruptcy help my Tax Issues?
Bankruptcy Code offers protection to anyone filing for bankruptcy. Taxing authorities, in adherence with federal bankruptcy code possesses a limited ability to alter your property while the bankruptcy claim is active. The filing of a claim may halt activity for the collection of taxes owed. A Chapter 13 bankruptcy mayoffer monthlytax payments without additional interest or penalties attached. In contrast,a Chapter 7 and Chapter 13 filing can reduce or eliminate tax obligations that were owed for more than three years.