The Ideal
There are numerous potential positive outcomes associated with bankruptcy that are not widely known or advertised. Most people are aware that bankruptcy can protect a property from foreclosure, but few realize that it can also help resolve second mortgages and home equity loans. By converting a second mortgage or home equity loan into an unsecured debt, which can then be discharged in bankruptcy, the bankruptcy procedure can help reduce mortgage debts. When this occurs, the debtor is left responsible for repaying only the original mortgage debt. However, not everyone or every mortgage will qualify for this assistance, but it is something your bankruptcy attorney should examine.
A portion of certain auto loans can also be managed in a comparable manner. If a debtor is significantly """"upside down"""" on a car loan, indicating that the car is worth significantly less than the amount owed, a portion of the debt may be forgiven. The 910-day rule states that the difference between the fair market value and loan amount of a vehicle purchased more than 910 days prior to the bankruptcy petition date can be converted into an unsecured debt. This enables the debtor to make payments on the fair market value of the loan rather than the original loan amount.
The Poor
Numerous individuals file for bankruptcy without examining key rules governing the operation of the procedure. The debtor is initially liable for completing certain actions and adhering to bankruptcy laws. This includes accurately completing the bankruptcy petition and submitting it to the court. If a debtor endeavors to conceal or withhold information regarding their debts or assets, the court may dismiss their case as fraudulent. Additionally, the debtor must pay the court filing fees and complete a credit counseling course. Incompletion of any of these stages may also result in case dismissal.
Numerous individuals whose cases have been dismissed may be interested in refiling them. There are strict limitations on the number of times a person may apply for bankruptcy. If a person's case was dismissed for failing to take the necessary steps, they must wait 180 days before re-filing. They may never be able to refile their case if it was dismissed due to fraud or the suspicion of fraud. Those whose debts were previously discharged in bankruptcy court must also comply with certain filing requirements. A debtor must wait 2 years after a prior Chapter 13 discharge to petition for Chapter 13 and 4 years after a prior Chapter 7, 11, or 12 discharge. The waiting period is 6 years after a Chapter 13 or 12 discharge and 8 years after a Chapter 7 or 11 discharge.
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