How bankruptcy will affect your debt will depend on what type of bankruptcy you are able to file. Due to the 2008-2009 recessions, many Americans are struggling with their mortgage payments, and more and more homes are entering foreclosure. A bankruptcy filing may be able to discharge the liability for any unsecured debt resulted from the foreclosure of a home. Many homeowners facing foreclosure choose to file for bankruptcy protection, either to try to stop the foreclosure proceedings, or to discharge any debt resulting from the foreclosure. There are two basic types of consumer bankruptcy: Chapter 7 and Chapter 13. Chapter 7 is the liquidation of one’s debts. In other words it will usually allow a debtor to wipe out his/her debts without having to make any additional payments. It does get more complicated than that, specifically when you have equity in some of your properties. Chapter 13 bankruptcy requires a debtor to propose a payment plan to the United States Trustee. This payment plan will be used to pay a percentage of your debts, sometimes all of them, over the next 3-5 years. Bankruptcy is not a good way to protect you from having to deal with money issues any longer. In fact, it should only be used if you have exhausted all other options available to you. And poorly timed bankruptcy can do much more harm than good.

Can bankruptcy help you? So you’re in default on your mortgage. You’ve several months behind on your payments. You’ve tried and failed to get a loan modification and work out a repayment schedule, and foreclosure is looming. Should you consider declaring bankruptcy? In terms of avoiding foreclosure, declaring bankruptcy might be considered the nuclear option. It has the power to wipe out many of a borrower’s debts while holding other creditors at bay. It can enable a borrower to hold onto important assets such as a home or car, while working out a repayment schedule to get caught up on payments for them. But a bankruptcy is generally considered a last-ditch option for dealing with overwhelming debt. For one thing, you may have to give up many of your current assets, such as savings and certain investments, in the process. A bankruptcy also has a long-term impact on your credit rating, remaining on your credit report for 10 years – a foreclosure, on the other hand, only remains on your record for seven. However, there are circumstances when it might make sense to declare bankruptcy in order to hold on to a home in which you’re emotionally and financially invested.

What is bankruptcy? Bankruptcy takes place when an individual or business declares the inability to settle obligation to it its creditors. This does not mean that the person will no longer pay his dues. He will still be held accountable. He will meet with a judge to discuss the possible payment scheme. The creditor will less likely receive full payment. He will only receive a portion of the amount owed. This will depend on the assets of the individual. The assets will be liquidated and will be used to pay the amount owed. Several factors can affect our home buying options and power. Bankruptcy is one of them. A bankruptcy lawyer can guide you through the complicated procedure of filing for bankruptcy. You will have to provide your bankruptcy lawyer with all your personal information in order to put together and file your voluntary petition. Once the documents are filed at the bankruptcy court, you will be assigned a trustee who will see to it that all the information that is needed is collected from you and that all the information provided is accurate. The next step would be to notify your creditors that you will be filing for bankruptcy so that they will have to stop all actions they might be taking up against you to get your payments. The decision is up to you, which way you will choose, but before making any sudden decisions remember to always receive guidance from professionals.

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