How Does Bankruptcy Work?

  • July 18, 2019

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How Does Bankruptcy Work

Every man who meddles in the world of monetary transactions understands that life had never been better since the concept of credit was made in our society and, what comes along with it is the opposite of security, bankruptcy. This article is written in the most outspoken manner to address the questions of many people, especially that bankruptcy is usually coated with business jargon, that the laypeople would tend to get confused with or not understand.

Introduction To Bankruptcy

Linda Konieczny in her book, Bankruptcy: Clear and Unbiased Facts About Bankruptcy Law,  puts the concept of bankruptcy in layman's term as associated with credit. In other words, credit is the primary function of a bank/financial institution to either let people run into particular regulatory prescriptions in their dealings or serves as profitable sustenance, a remedy to those who are having financial problems. To give you a simple picture, credit is involved when one may be granted or denied with a requested loan.

Consequently, connecting the concept of credit with bankruptcy enters when a person, either expressed or implied, acknowledges that s/he is not able to pay his/her debts. It is cited in Cara O'Neill's book, Chapter 13 Bankruptcy, that since the immediate changes in our time improved the processes of filing resolving bankruptcy, there was a time when an official bankruptcy plan was presented but did not materialize, hence, from 2017, it is observed that a formal plan form or a local plan form that complies with newly adopted federal standards was taken.

Before dwelling into the legal aspect of bankruptcy, one may consider the following tips to do-away with bringing the matter in the courts or even spending tons of money to settle the case.

Before You Declare Bankruptcy

First, weigh the pros and cons before declaring bankruptcy. Why? Legally, a bankruptcy is expressly claimed when a process is initiated by the debtor who obtains court-ordered relief from having to pay off his/her debts. (O'Neill, C., 2017)

When this action accrues, there is no going back. You will be in great need either of a credit counselor or a bankruptcy lawyer(on the latter part, I recommended a firm having bankruptcy lawyers), who will be assisting you and informing you about the costs or benefits of declaring the bankruptcy.

Second, know the type of bankruptcy that you have. This aspect is another important consideration for you to understand what may be at risk once you pursue this action. It may be whether your debt will be discharged or would it instead cost you more, or would it affect your employment status.  It is said that there are two (2) types of bankruptcy, Chapter 7, the straight bankruptcy, the typical kind of bankruptcy the people would commonly think. What happens here is that a debtor's non-exempt assets are liquidated or sold and the proceeds are used to pay toward unsecured debts like credit cards, loans, medical bills, and the like. In this case, usually unsecured creditors get nothing, while debtors do not lose their property.

Chapter 13 Bankruptcy

On the other hand, Chapter 13 is said to be a debt reorganization or consolidation bankruptcy. In a concrete context, a persona who is having a regular monthly income, their debts are rolled in one low monthly payment. Since debtor is paying back his creditors through this repayment plan, the debtor is not a risk of losing any assets compared with Chapter 7 bankruptcy. When lawyers are involved, creditors are restricted from contacting the debtors without contacting first the debtor's attorney and the court. Though, contrary to what many believed, bankruptcy does not permanently damage one's credit (Konieczny, L., 2016).  So, thoroughly review your measures before resorting into an inescapable dilemma in the long run.

Third, if you regard some of your personal items, you may want to think about other options other than the declaration of bankruptcy. Since dwelling in this action leads to indispensable results such as the discharge of these items, think about another option, feasible and a win-win for you and the other party. Another is the fact that your credit record will be marked as having gone bankrupt, which approximately lasts for seven to ten years.

Fourth, consider whether the matter may be settled in a manner not requiring the bankruptcy courts or even a bankruptcy lawyer. It is best to discuss specific monetary issues with efficient communication and understanding between the parties.

Another point of information would be that, it is recorded and cited in the United States Bankruptcy Court of District of California website that the Region holds five (5) locations having a court, they are: Riverside, Santa Ana, Los Angeles, San Fernando Valley, and the Santa Barbara.

Additionally, this Court has authority in the seven-area region, covering San Luis Obispo Counties, Riverside, Los Angeles, Orange, Santa Barbara, San Bernardino, and Ventura.

If you want to know more about [California Central Bankruptcy Court(s)] (https://www.cacb.uscourts.gov/ )  , you may check out their website  for more details. Aside from having these courts, I would also recommend a set of competent and effective lawyers in this site: www.kt-bankruptcylawyer.com .

Above all, bankruptcy can be circumvented when one keeps on track with his/her monetary status, debts, or contracts. Hence, if we are proactive in every way, bankruptcy will be the last thing that will be in our minds when it comes to our monetary assets or securities.

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