Bankruptcy is a proceeding. This legal option is available for businessmen, who cannot pay the bills before the due date. By doing so, the businessmen not only get to start afresh financially, but also can safeguard their possessions and assets from falling into the hands of the creditors.
As per the law set by the federal bureau, bankruptcy can be filed only in the federal courts, and will be handled by the respective solicitors. Once you file bankruptcy, the court will make sure that it takes care of keeping creditors off your property and possessions. The court will also sort out the debts that you owe to people accordingly, and help you in proceeding with further steps.
Even though the federal court will help you with safeguarding your assets, it will not help you to escape from particular debt types that you owe. Such arrears are also known as non-dischargeable debts.
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Bankruptcy and its Effects
Bankruptcy will help you with many factors. Some are listed below.
- When you take loans, you will automatically come under the legal obligation. After filing bankruptcy, this obligation to cover your entire or most of your debts, will be eliminated. This was introduced with the main goal of helping the companies to start afresh. This factor is also known as discharge of debts.
- It stops the foreclosure of your mobile home or even the residence. This will help you with following up on the payments that you have missed, because of foreclosure. However, you are obligated to pay the mortgage or other such loans that you have taken with the home documents as surety.
- Sometimes, the assets such as cars or other such vehicles will be taken over by the creditors, if you miss or fail to make it to the payment date. Filing bankruptcy will help you with taking back the authority over your automobiles or even some properties, even if the creditors own them.
- Creditors follow many methods to take back the money that they have offered as loan. Filing bankruptcy can reduce or even completely restrict the harassment, wage garnishment, etc, and other such actions from creditors’ side.
Benefits
Bankruptcy exemptions in Texas come with many benefits.
- Some properties can be procured by loans. If your equity cover the payments concerned with the properties that you have secured, then you are allowed to keep such properties through the bankruptcy filing.
On the other hand, if your exemptions do not involve some properties and assets, then the trustee has the authority to dissolve and even distribute such possessions. However, you will be paid with cash along with permit over your exemptions.
- If you are married and file bankruptcy, then you are allowed to claim the exemptions, either separately or jointly.
- In the case of non-exempt properties, it is necessary that the debtor should pay the current market value of that particular land or possessions to the trustee, which comes under non-exempt property list.
Always remember that the property equity is included in the exemption limit. To keep it simple, $500 will become the equity, if you take a loan of $4500 for a $5000 car value.