Legal

The Pitfalls that Traps Individuals While Applying for a Chapter 7 Bankruptcy

Getting into a debt might not be in anyone’s hand at all points of life. But how one gets out of it is completely in one’s control. Just doing some right things at the right point might have some greater impact in getting out of the debt. But before determining the ways of dealing with the debt, it is essential to determine whether there’s any major responsibility of repairing either the past or the future. Hence for millions of debt ridden individuals, it is plausible that they file for a personal bankruptcy that will protect and bring them out of their financial quagmires. For most of the individuals and small businesses, they seek shelter under the Chapter 7 Bankruptcy Jackson TWP, OH in order to shrug off their personal liability on the debt.

Chapter 7 Bankruptcy Massillon

Chapter 7 Bankruptcy is generally termed as liquidation bankruptcy determining the fact whether any company or individual concerned is beyond the scope of reorganizing the credit or not, and is bound to sell off their non-exempting assets in order to pay the creditors. Under Chapter 7, the creditors collect the money according to the amount that has been given to the company as loan. The court intervenes, appoints trustees, who take care of the fact that all the personally owned assets are sold out in order to collect the cash that would help them pay off the debts to the creditors. There are multiple chapters under which bankruptcies could be filed, but Chapter 7 is generally considered to be the most comfortable, as the rules are much easier. The Chapter 11 of bankruptcy, which is termed as rehabilitation bankruptcy is much more complicated than the Chapter 7, since it gives the businesses opportunity to reorganize the debt, pay it off and re-emerge in the market as a viable entity.

Undoubtedly, there are multiple advantages of declaring bankruptcy. First and foremost, the moment a Chapter 7 bankruptcy is filed, all kinds of collections, lawsuits, wage garnishments gets stopped immediately. But with strong pros, comes in stronger cons. There are some major pitfalls, which if avoided can turn out to be serious at times. While building an effective roadmap that leads toward accumulating wealth, reconsecrating the prospective land-mines ahead seems to be a justified move.

What are the surprises that awaits while filing for a Chapter 7 Bankruptcy?

Firstly, each and every state has it’s own peculiarities and exemptions. While some of the state laws are too generous towards those who file for bankruptcy, the rest are excessively stringent towards them. There are few states which give the liberty of sheltering the automobiles, the necessary household goods and the individual retirement accounts, so that one doesn’t end up being a vagabond. On the other hand the restrictive states might not allow anything to keep under possession. So before filing for the bankruptcy, it is essential for an individual to learn all the rules and regulations of the states so that such situations are avoided.

The next thing that needs to be kept in mind is, the bankruptcy is filed in order to get rid off the creditors so that the individuals can find some room to breathe in. Certain unsecured debts like that of the credit cards are completely wiped off the book with filing the bankruptcy. But most of the applicants are not aware of the fact that the law doesn’t allow to walk away with mortgage loans or any kind of secured loans with filing a bankruptcy. This ignorance is never a bliss for individuals.

Similarly, if any of the collateral of the applicant involves the co-signors, then the co-signors will not be able to emerge out of the debt along with the applicant. They will be equally liable for the part or rather all of the debt for which the applicant is discharged of. Bankruptcy is almost similar to the Scarlett letter which tags along with the applicant for at least a decade. The only good thing about it being, it gives an individual ample time to re-establish the credit rating that has gone down by paying off the debts in time.

It is true that one who files for a Chapter 7 Bankruptcy Massillon, OH does get the opportunity of withholding the income taxes, but that gives rise to the myth that by applying for a Chapter 7 also gives one the opportunity to get rid of the sales tax as well. But it must be known that such taxes are never withheld with Chapter 7 bankruptcy, however old it might be. The other section of people have a misconception that they can actually pick and choose from the list of their possessions which they want to list in the bankruptcy. This turns out to be really shocking for them that such cases are mere folktales. The law of all the states stands to take up all the possessions they have while one files for a bankruptcy.

Even before the credit cards came into fashion, there was a common saying that was repeated in Bible, which said, that it is better not to owe anything to any man, but to love all, because he who has loved others abides by the law. Those who’ve already filed for a bankruptcy, must consider this strong statement made in the Bible to live a faithful life.