What is Personal Bankruptcy?

Personal bankruptcy is the process of declaring oneself insolvent in the event of an individual being unable to pay off his or her debts. It is the last resort for a person to declare them bankrupt. It happens when the rate of the increase of the person’s debt is more than his or her ability to pay it back. Bankruptcy is entered into with the help an attorney who determines if there are any alternatives to declaring oneself bankrupt. It involves listing of debts and liabilities along with a list of assets and other properties owned by the person. The accounts of the person are then frozen and no further accrual of monies into the accounts is possible.

There are two types of personal bankruptcies. One type is Chapter 7 bankruptcy and the other type is Chapter 13 bankruptcy. The difference between the two lies in the manner in which the court allows some assets to be retained by the individual. All the transactions for a particular individual are frozen once the person files for bankruptcy. It is better to consult with an attorney before you decide on filing for personal bankruptcy. The attorney would be the best person to judge on what kind of bankruptcy that you should file for. Be sure to include everything that you need to declare before the attorney and ultimately in the court.

Filing for personal bankruptcy can be a traumatic experience if you have not planned on the way in which the filing has to be done. It is better to take expert advice and lessen the blow of filing for bankruptcy. There are enough number of attorneys would help you out with the process for a fee. The process can be less painful if you approach the right attorney. For this you need to do some verification about the kind of attorney you would need for help and advice. Once you have zeroed in on the right attorney, you should come clean about your assets and liabilities. Only then can the attorney or the legal process be of any use to you and the process of filing for bankruptcy.

Bankruptcy and Loan Modification

Homeowners in the US have never had it so bad, as currently. The global and domestic economic crisis has indeed hit so many millions of people like a ton of bricks. On one hand, they had taken loans, some of them quite substantial and on the other hand, layoffs had adversely affected their ability to replay loans. This has increased the requirement for bankruptcy and loan modification as so many people are under threat of going down under a mountain of loan woes.

When people are faced with mounting bills to pay and the prospect of reduced earnings, they become faced with the possibility of insolvency and begin to renege on their payment commitments to the bank or the lending institution. This is when the process of bankruptcy and loan modification kicks in, especially when borrowers do not have direct recourse to renegotiation of loans or mortgages. The first resort of people is to approach an attorney to make a pitch for loan modification through a formal loan modification. Loan medication makes an appeal to the lender to either reduce the balance payment in line with the true lower value of the property, increase the tenure or lower the interest rates, so that the borrower can try to make good the payment on the revised terms. This involves presentation of the incomes and expenses statement with documentary proof to the lender, to make a request for revised terms of the loan.

In case the lending institution turns down the appeal for loan modification, the homeowner can go in for filing for bankruptcy under the provisions of US Bankruptcy law. There are provisions under Chapter 7 and Chapter 13 of the bankruptcy law, whereby a borrower can either liquidate assets to pay off debts and e clear within 4 months or else accept a 3- 5 year tenure of financial discipline so as to retain the assets while paying off the debt. In any case, bankruptcy and loan modification are options that one has to consider given the unique conditions and merits of each individual case.