History and Chapters of Bankruptcy
A bankruptcy law suit aims at helping the debt ridden citizen or an organization to be relieved from the pressures of the existing debts. The goal is achieved by providing the debtor a bankruptcy discharge, which releases him from the personal liability from certain specific debts. It also prohibits the creditors form initiating any legal action to realize their debts. There are various types of bankruptcy laws that provide debt relief or discharge in form of debt liquidation to the debtors.
Chapter 7 of Bankruptcy
Under chapter 7 of bankruptcy, the process of liquidation of debts is supervised by a trustee. The trustee takes over the assets of the debtor’s estate and reduces them into cash. The debtor can seek exemption to retain certain types of assets of his property and also the rights of the secured debtors. In most of the cases under chapter 7 of bankruptcy, the debtor has little or no non-exempt property. Therefore, there may not be any liquidation of the debtor’s assets.
These cases are also called as ‘no-asset cases’. In such cases, the creditor with unsecured claims can get back his loan only if he can file a proof before the bankruptcy court of the existence of assets, which can be reduced to cash. Since there are generally no such assets left with the debtor, he gets away without paying back any unsecured loans. A debtor, if he is an individual, normally receives a discharge within a few months of putting up his application for such relief.
A Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 amended the Bankruptcy Code so that the individual debtor should pass a ‘means test’ to qualify for relief of discharge under the chapter 7. If the income of the debtor is higher than a certain level, he may not be eligible for the relief.
Chapter 13 of Bankruptcy
There is yet another law, which enables the debtor to keep his valuable assets such as house under chapter 13. It allows the debtor to propose a plan to pay off the creditors over a period of three to five years. This provision comes in handy for the debtors who cannot qualify for relief under the ‘means test’ of chapter 7. If the repayment plan of the debtor is confirmed by the court, he can make the payment to his creditors through the trustee of the court and save his asset. The only thing is that unlike in chapter 7, the relief in the form of discharge of debts cannot be availed immediately.
The debtor must fulfill the conditions of repayments. Under chapter 13, the debtor is protected from lawsuits, garnishments and other forms of creditor actions while the repayment plan is under implementation. The discharge of debts is also somewhat broader under chapter 13 than under chapter 7, in the sense, that more debts are cleared off by the repayment plan.
Chapter 11 of Bankruptcy
In case of organization and commercial enterprises the relief through the discharge of debts is provided through an act called Reorganization. This is done under chapter 11. The assets of the debtor under the chapter 11 are not liquidated and he continues to operate his business. In this way, he can also make payments to his creditors. This reorganization of repayment of debt is done through the approval of the court. A debtor, under chapter 11, has to make his proposal for repayment within 120 days of filing the case for bankruptcy.
He has also to file a disclosure statement to his creditors containing a detail of his proposal to clear off their loan. The court ultimately approves or disapproves the plan of reorganization. If the plan is approved and confirmed, the debtor can reduce his loan liability by repaying a part of his obligations and seek discharge for the other debts.
anonymous
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10 Responses to “History and Chapters of Bankruptcy”
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Where can we be approved for home loan with bankruptcy on file and almost to none credit history?Does anyone know if we can be accepted for home loan of under 50000$. One does not have credit history and is slowly building it by getting credit cards and some services like cell phone and the other filed for bankruptcy discharged chapter 7 about 5 months ago with a credit score between 400 to 500. Thanks for your answers
I don't think you can. Better forget it for now.References :
It will be almost impossible in today's climate. Better figure on taking several years to reestablish your credit first.References :
Go to a mortgage company and ask them….
You will most likely need to start the loan process which, for now, will stop at a mortgage commitment letter, which is basically a letter from the bank saying you are qualified to get a loan of $X.
The more money you have to put down, the better the bank will view your loan application as you will have equity, should you foreclose, there is an expectation that the bank will not lose ALL investment.References :
If it were 5 years ago I'd say sure there's bound to be someone out there who'd do a loan…but not now after so many people who should never have been granted a loan in the first place are defaulting and sending the U.S. economy into the shitter, I pretty much doubt it.References :
It is very easy. It's easier to get credit after a bankruptcy than it is to get approved for a purchase/lein/loan with other things on your report.References :
You can't. Your financial history shows that you do not know how to handle financial responsibility. You are a perfect definition of sub-prime loans. Get your credit cleaned up and I doubt you will be able to get a loan for at least 7 years..until the bankrupcy is off your credit history.References :
sorry u do not need an alligator around ur neck to drown u again.
keep renting for at least next 3 yrs while u learn how not to go into debt again and save lotts of money.
visit dave ramey.com to learn ur hard lessons again.References : foreclosure server , saw ur movie / ending
I am sorry for you problem but you will definitely have to build your credit up again. I am not going to judge you because I know exactly what you are going through. I have always paid my bills and one day you wake up so worried if you are going to be able to meet you obligations. Its sad but for some of us living the American dream is one big nightmare. Credit Cards are evil. They suck you in with low interest rates and then when you get into trouble and I am not even saying you missed one payment they not only will not help to bail you out or offer a solution, but go up on the interest rate when you have never been late or missed one payment. I am not asking them to pay my bills but help me set up a plan to pay it back to avoid bankruptcy. Sometimes emergency arise where you loose your job or become ill and because the cost of living is so high that you have nothing to fall back onto. So no judgment here, but it will be along time before you will ever get on top again. So try to make the best of what you have and don't worry about buying a house until you can be worthy in their eyes . Unlike you I have not filed for bankruptcy but it is not far off in my future.References :
Lots of people think that once they’ve filed for bankruptcy they will be unable to ever get a loan again, and ultimately they are unable to do anything financial ever again. This isn’t always true, there are<!–always ways to improve your financial standing, and there are also ways to repair your damaged credit rating.
http://best-loans.awardspace.com/Bankruptcy.htm
In fact one of the best ways to improve your credit rating is to refinance your home mortgage, this–>will help to improve your credit history in a number of different ways.References :