Refinancing after bankruptcy is possible

2007-03-08 10:33:40

( Legal )



For most people, bankruptcy is a scary word. But few really understand what bankruptcy means, its implications, and the process involved in filing bankruptcy. Add to that is an overload of information pertaining to refinancing after bankruptcy, mortgages after bankruptcy, filing bankruptcy, Florida bankruptcy law, bankruptcy alternatives and unsecured loans which cause even more confusion.

Bankruptcy is defined as the legal means through which businesses or individuals with overwhelming financial obligations are protected by the bankruptcy court while paying and working through their debts. However, filing bankruptcy is not the answer to every financial problem and should only be considered after other financial alternatives have been exhausted. In fact, bankruptcy does not cover common obligations like taxes, spouse and child support or medical bills, credit card debts and unsecured loans.

Filing for bankruptcy is a long, rigorous, and complicated process with unfavorable and often lasting consequences. A bankruptcy record stays in a debtors file for ten years and leaves a negative impression even after debts have been paid off. This may be a cause for concern to some financing companies when refinancing after bankruptcy. However, filing bankruptcy will also enable a fresh start and allow you to put your financial affairs back in order.

Before filing bankruptcy, you have a choice to make between two types of bankruptcy. A Chapter 13 bankruptcy allows debtors to own property which a creditor can otherwise claim as a form of payment. Also known as reorganization, it allows debtors to settle a debt over a period of time instead of giving up their property. Chapter 7 bankruptcy, which is permitted every six years, is favored over straight bankruptcy which requires liquidation of possessions not exempt in a debtors state. Basic home furnishings and work-related equipment or tools are usually considered exempt but several properties may be confiscated by creditors or sold by an official appointed by the court.

After you have selected a bankruptcy type, you need to gather all the personal information needed to file a voluntary petition. You will need a bankruptcy lawyer throughtout the process to help ensure everything is in order and runs smoothly. Once your records are filed in bankruptcy court, a trustee assigned to your case will make sure all the information you have furnished is accurate and all data needed from you is collected. Your creditors will then be notified that you are filing for bankruptcy so that all actions they have brought up against you in order to collect your payment may be stopped. This may involved meeting together with your creditors and their lawyers and other parties involved in your bankruptcy case. Remember filing bankruptcy is a long and tedious process so you need a lot of diligence and patience.

Finally, filing bankruptcy does not necessarily mean financial ruin but is a means in itself to resolve your present financial troubles. Refinancing after bankruptcy is possible and you can take steps to get your financial life back on track.


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