Bankruptcy Explained In Plain Words

Being in charge of a household or a business is not an easy task and when people without experience undertake such ventures the financial struggle may cause credit damage and debt accumulation. Without proper money management and debt management measures and sometimes even in spite of them, the final outcome is usually bankruptcy.Filing for bankruptcy used to be a common practice to bring ease to people’s finances easily and without effort at the expense of creditors. But since in 2005 the Bankruptcy Abuse Prevention and Consumer Protection Act has been in force, bankruptcy filings have dropped dramatically. The problem is that the new act has set the limits too high and few can now qualify for the relief bankruptcy provides even though no one would want to be in such situation.Chapter 7 Bankruptcy and Chapter 13 BankruptcyThere are two types of bankruptcies according to current legislation. The two processes are completely different and should be regarded as such. Chapter 7 bankruptcies provide a solution to extreme situations where the debtor can no longer repay debt and needs to get a fresh start. This bankruptcy type eliminates debt by cancelling a portion of the outstanding debt with each creditor by means of the sale of the debtor’s assets.Chapter 13 bankruptcy on the other hand, does not necessarily involve the sale of assets. Instead, the debtor and the community of creditors with the aid of the court, negotiate new terms and establish a new repayment program which needs to be feasible, affordable and economically viable both for the creditors and the debtor.How About Filing for Bankruptcy on My Own?By now you surely have heard: Why paying thousands of dollars on legal fees when you can file for bankruptcy on your own?. The question is, can everybody do so? Truth is that it can be done but a lawyer will probably save you a lot of hassles and probably money too. Legal experts are familiar with all technicalities that can provide you with greater financial ease.Moreover, the new bankruptcy law requires that you get credit counseling before processing your bankruptcy forms. Therefore, you will already be familiar with your situation and possibilities and have enough information then to decide whether you need legal assistance or not if bankruptcy is your only choice. In any case, you should always contact an attorney if you are not sure about how to get through this process.Foreclosure Is a Risk, Be ProtectedYour mortgage can endanger your property if you fail to repay it. Financial failure may imply that you loose your property to foreclosure. If you are threatened in any way by your mortgage loan lender, if you receive notification of possible foreclosure or even if you think that something is going on because the lender is not trying any more to recover the investment, you should contact a lawyer immediately. There are foreclosure attorneys specialized on these issues that will be able to assist you in keeping your property if at all possible. Just remember that when it comes to this issue, time is of the essence.