You Owe Money- Thinking about Bankruptcy

What does Bankruptcy Means?

Bankruptcy is a legal process that can provide relief to honest but unfortunate individuals who are unable to pay their debts. The bankruptcy process begins with a petition filed by the borrower (most common) or on behalf of creditors (less common). All of the debtor's resources are calculated and evaluated, whereupon the assets are used to pay back a portion of excellent debts. Upon the successful completion of bankruptcy proceedings, the borrower is relieved of the debts obligations suffered prior to bankruptcy.

Learn the Truth about Credit Counselors

The primary source of income for credit counselors comes from your settlement. They are not necessarily negotiating in your best interest. The more you agree to pay the more the credit counselor earns. Think about why you wanted to avoid bankruptcy. You probably thought it would be better on your credit if you settled with a credit counselor. Not all your creditors will be willing to settle on their debt. You will receive 1099s’ from all creditors you settled with. You will have to pay additional taxes to the IRS on the amounts you saved. This is not the case in a bankruptcy. Some credit counselors will try and convince you to take money from your pension to pay credit card debt.

What Happen if You File For a Bankruptcy?

If bankruptcy is the choice you select, you will work with the trustee to finish the needed types. The trustee will then file these records with the OSB and you will be officially announced bankrupt. Once you have been declared bankrupt:

• Your assets will be sold by the trustee.
• Your creditors will be notified
• Your creditors may hold a meeting.
• You may examined by the OSB.
• You may make “surplus income” payments.

How can you discharged from the bankruptcy?

A discharge release you from the lawful responsibility to pay back the financial obligations you had as of the time frame you registered for bankruptcy, except for particular types of financial obligations that are omitted by law. The timing of your discharge depends on your bankruptcy lawyer or attorney, including whether this is your first bankruptcy, and whether you are required to make surplus income payments.