Mortgage Loan Series: Focus on Bankruptcy


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Brief Overview of Bankruptcy

Bankruptcy is simply defined as the legally admitted inability to pay a creditor. If a creditor can sense that its client cannot make his/her payments, it can request that the client files for bankruptcy so as to collect as much of the money they are owed as possible.

The Primary Laws of Bankruptcy

1. To wipe clean the slate of a debtor, relieving him/her of almost all debts 2. To repay creditors so far as the debtor can afford to

The Benefits of Bankruptcy

Additionally, filing for bankruptcy enables those in debt to divide up their “non-exempt” assets among creditors, so as to resolve their debts altogether. On top of this, debtors are basically exempt from any other financial obligations even if their debts have not been fully paid off. During the filing process, the debtor is protected by a “stay, ” which disables creditors from pursuing further actions.

Bankruptcy Trustees

The duty of a trustee is administering bankruptcy estates. To do so, they must prepare all paperwork for the debtor to officially declare bankruptcy, as well as review the documents so as to check for fraud. A trustee is also responsible for selling non-exempt assets and counseling debtors.

Legal Considerations

In Article I, Section 8 of the United States Constitution, Congress is governed to carry out a uniform law regarding bankruptcy throughout the nation. State law plays a critical role in most bankruptcy cases, so it is illogical to make generalizations concerning bankruptcy issues and policies.

Bankruptcy Chapters

There is a total of six types of bankruptcy filed under the Bankruptcy Code. Chapter 7 of Title 11 of the United States Code outlines a “liquidation-style” type of bankruptcy; Chapter 9 discusses municipal bankruptcy; Chapter 11 describes the “rehab” type used for the most part by business debtors with substantial debts; Chapter 12 talks about a payment plan/rehab case for farmers and fishermen; Chapter 13 does the same as the previous case, yet it is designed for individuals with a constant flow of income; and Chapter 15 deals with “cross-border” cases. Chapters 7 and 13 are among the most common types of personal bankruptcy.

Gregrey Pashby is a writer and contributor for Bad Credit Lender who specialize in bad credit loans and hard money loan information. Bad Credit Lender provides poor credit mortgage refinance loans, bad credit home loans, and hard money loans. In addition, Greg is one of the main contributors to the Coastal La Jolla Funding - A California Hard Money Lender and 1st Access Hard Money & Foreclosures .


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