Bankruptcy Information
Bad Debt Consolidation by splinder
Filed under Bankruptcy
Bankruptcy is a declaration by a debtor who is unable to fulfill existing debt obligations. A debtor can be an individual or a business. If a debtor’s bankruptcy petition or request is approved by a bankruptcy court, an automatic stay is placed on his/her assets. This stay prevents creditors from seizing assets or conducting other payment collection strategies.[br]
Due to the perceived convenience and benefits of filing bankruptcy to manage debt, people are quick to resort to it, without considering its repercussions. This negligence highlights the importance of researching bankruptcy information to determine the suitability of bankruptcy. It also helps to devise better debt management alternatives.
Bankruptcy Information: Answering Common Bankruptcy Myths
Some widespread bankruptcy myths are:
All debts are discharged in bankruptcy
In reality, a debtor remains liable for several debt obligations, which includes:
- Child support
- Alimony
- Student loans
- Secured debt
- Payments against court-ordered judgments
Credit may be reestablished easily after bankruptcy filing
A bankruptcy record on a credit report makes lenders hesitant to approve loans. Besides, such a record stays on the reports for at least seven years. If one seeks to purchase a house or a car, loans on them must be obtained before filing bankruptcy. This is because obtaining them with a bankruptcy record is next to impossible.
For credit establishment after bankruptcy, a defaulter may manage to obtain credit cards even with a bankruptcy record. However, such cards are generally secured (backed by an asset) or issued by sub-prime lenders, who charge high interest rates.[br]
The ownership of all assets is transferred to the court
Bankruptcy laws and exemptions vary from region to region. Generally, individuals are permitted to retain ownership of the following assets:
- Principal home
- Household goods
- Insurance policies
- Tools of trade
- Vehicles whose value is less than a defined limit
Spouses have to file bankruptcy together
If one spouse’s debt obligations are extremely high and the other has a fairly decent status, bankruptcy must ideally be filed by only the former. The financially sound partner may help his/her spouse to reestablish their credit rating faster.
Finally, bankruptcy filing does not become known to everyone unless the defaulter is a public figure. Typically, a bankruptcy filing remains within the knowledge of the debtor and relevant creditors.
Looking for San Diego Bankruptcy Lawyers? Let Steigerwalt Law Firm help you.