Frequently asked Bankruptcy Questions
Most people might not know about bankruptcy proceedings, because this is not really something people will look forward to. However unfortunately, following an economic turmoil many individuals are trying to get answers for many bankruptcy questions. For this reason, we will highlight a few of the most frequently asked bankruptcy questions along with the answers below. Understanding these questions are key before pursuing a mortgage after bankruptcy.
What is Bankruptcy?
When a company or an individual have outstanding financial debts that they are unable to repay, in most cases they have to file for bankruptcy. A person is considered bankrupt in cases where their debts have matured and they cannot find the resources to repay the creditors. There are two popular forms of bankruptcy and these are the Chapter 7 and the Chapter 13.
Why would an individual seek bankruptcy relief?
Whenever an individual or a company is overwhelmed with financial debt, they will try to get relief by filing for bankruptcy. Generally what happens is that a costly investment decision will go bad and the person will not get the expected returns on the investment, which causes him or her to become bankrupt. As an example, if you purchase a rental property that is supposed to cover the monthly installments for the mortgage and you are unable to collect rental income, then this will cause you to default on your loan payments and end up with a huge debt that you cannot repay. Getting another mortgage after bankruptcy will take some time.
Are there any governing laws for bankruptcy?
Bankruptcy in America is governed by a Bankruptcy Code, including in a section of the Title 11 in the United States Code. This bankruptcy law is inserted under the Federal Jurisdiction based on the United States Constitution. Be sure to be familiar with these laws before investing in a mortgage after bankruptcy.
Can anyone file for bankruptcy?
Business entities and individuals will be able to file for bankruptcy in the United States.
What are the different types of bankruptcy?
Based on the Bankruptcy Code, you can find 6 Chapters governing the filing for bankruptcy. But, the most popular ones are Chapters 7 and Chapter 13. Some other Chapters can only filed by individuals who are prescribed within the respective Chapters, which are 15, 12, 11 and 9.
How do you start the bankruptcy process?
In order to file for bankruptcy, it is advisable to make a list of previous and existing financial obligations, in addition to a declaration of your liabilities and assets. You will need to complete the different bankruptcy forms. Generally, the overall cost for filing for bankruptcy will include the filing fees and fees for bankruptcy lawyers.
Bankruptcy can adversely affect your credit report and also your chances of getting any credit line or a mortgage after bankruptcy in the future, because job applications and renting housing will not be looked at in a positive way. Therefore, you should carefully think about your decision to file for a bankruptcy and also consider other available options first.