KEL Attorneys – Is Bankruptcy The Answer?

Bankruptcy may be your best solution to get a fresh start when your unable to pay off your financial obligations. To find out if bankruptcy may be a method to help you stop a foreclosure, we first need to know about bankruptcy and the different kinds that make it applicable to each situation.

An Overview Of Bankruptcy
Bankruptcy is simply defined as the inability of an individual to pay the creditors. Most individuals, who cannot fulfill their financial obligation to the creditors or lenders, file for bankruptcy to wipe the slate clean and get a fresh start. Another definition of bankruptcy is liquidating the assets of the debtor to release them from the liabilities or financial obligations.

There are two kinds of bankruptcy known in any court system. One is called involuntary bankruptcy where the lender or creditor will file the bankruptcy petition against the debtor in court when they’re unable to pay off their debts in full. The reason for this is the lender will simply try to recoup the amount owed to them by the borrower and attempt to get a marginal income from the amount they have invested to the debtor.

Voluntary bankruptcy on the other hand is when the debtor initiates the petition on their own. One reason for this is the inability of the debtor to pay off the amount owed to a creditor or will try to get out of the financial obligation by declaring in court their state of financially difficulty.

Bankruptcy Chapters
There are two kinds of bankruptcy that a debtor can file in court, a Chapter 7 and a Chapter 13 bankruptcy. Each has their own criteria and process that fit within the situation of the debtors position.

A Chapter 7 bankruptcy opts for the liquidation of the said property to cover the debt to the creditor. With this method, the debtor will have some of the proceeds left from the sale of the property to start all over again.

A Chapter 13 bankruptcy on the other hand is simply reorganizing the debts in which the creditor will give 3-5 years for the debtor to pay the amount due.

Be warned that not all debts are covered under bankruptcy; common debts that bankruptcy can be a solution for are credit cards, unsecured loans and medical bills. It’s always best to consult a lawyer or a financial adviser when you plan to use bankruptcy as a solution to your problems.

Qualification
Chapter 7 and 13 bankruptcy is not as easy as filing it out directly in court. Each has its own intricacies and qualifications that fit the situation of the debtor. If you’re willing to loose all your assets in settling your debt then liquidation through Chapter 7 bankruptcy would be your best option.

If the collateral is a business property and the business is still doing well, then it’s best to settle with a Chapter 13. If you’re lucky, you may get an approval along with a five year extension to pay off the full or remaining balance of your debt.

It has been noted in the US government that anyone who has already filed a Chapter 7 or Chapter 13 bankruptcy within the last 6 years is NOT allowed to file the same method again.

If In Doubt, Consult A Professional
If your uncertain which bankruptcy method to choose as the solution for your financial problems, then it’s best to consult a bankruptcy attorney. At KEL Attorneys we can provide insights, as well as suggestions regarding possible solutions to your financial problems.

If bankruptcy is your final option in your situation, then it is best to consult KEL Attorneys to see which bankruptcy option would suit you best. There are certain prohibitions in law stating that even if an individual files for a Chapter 7 bankruptcy, it is quite possible to retain some, if not all, of their assets. So consulting a lawyer is your best option if you wish to make most out of your situation.