Is Bankruptcy The Answer?
Bankruptcy is a legal process that allows for the discharge or reorganization of debts for businesses or people who find themselves in the position of not being able to pay their debts. Bankruptcy can mean a fresh start at financial management for the debtor and fair compensation for creditors.
Assets fall into two catergories for bankruptcy purposes. Exempt and non-exempt. Exempt assets are those that debtors are not required to use to repay their debts, for example
- a certain amount of home equity
- a small amount of vehicle equity
- small allowance for clothing
- allowance for other personal items.
A bankruptcy trustee will be appointed and they will oversee the repayment of the debtors debts and the sale of any non-exempt assets.
Debts also fall into two categories under bankruptcy. Secured and non-secured. Non-secured debts are those such as credit cards or store cards. Secured debts are those where the creditors has an interest in the property in question such as your mortgage lender. Secured debts have priority over non-secured debts in bankruptcy proceedings and as such will be paid off first.
If you really feel that declaring bankruptcy is your only way forward then talk things over with your attorney. The values applied to exempt assets vary from state to state so you will need to take advice on that before deciding which type of bankruptcy is right for you.
Recommended Programs When Facing Bankruptcy
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