Credit Counselling – The 2005 Bankruptcy Abuse and Consumer Protection Act
It is a given fact that bankruptcy is the worse thing that can happen to any homeowner. This has heavier impact on your credit score since this gives an impression that you are not capable to pay any loan amount that you may owe. Thus, lending companies would automatically deny your application once they found out that you have been bankrupt for once in your life.
Chapter Seven bankruptcies are the most common choice for many people. By filing under this chapter, you are given a clean start; all of the debt that you claim is wiped out. The debts that can be claimed must unsecured and certain assets, if you have any, can be liquidated to repay your debt, with the remaining balance erased. You cannot claim debts like student loans, judgments from an injury case, delinquent child support, or alimony payments. Individuals or businesses can file a Chapter Seven.
Bankruptcy no longer carries the social stigma it once did. It is often considered the mark of someone who had the guts to try and go it alone, but failed, through little of their own, (after all, it’s the banks we now all love to blame!)
However, this doesn’t make the actual process any less stressful, and in 2005 the government brought in the Bankruptcy Abuse Prevention and Consumer Protection Act, which made it even more stressful to claim bankruptcy.
On the other hand, when you file for Chapter 7 bankruptcy, this will require you to do liquidation of all your assets. The assets which are said to be exempted are the work-related tools and standard household furniture. This type of bankruptcy can be filed in one year or every half of the year. When you choose this option, always remember that this is the worse report you can ever get. You have to expect that you will have a hard time applying for a loan.
State rules have a few additional requirements. Many states will also require credit counseling before any chapter will be granted. There are also some states that will require you to obtain a lawyer because of the complicated nature of certain chapters. Regardless, it’s a good idea to discuss your options to see what you qualify for.
May it be a home loan, car loan or any credit, you need to have a high score in order for the lenders to grant you a loan. Otherwise, you will have to look for other financial assistance to pursue your dreams.
Filing bankruptcy can be a confusing and long process if you don’t know what you’re doing. It is important to research the different bankruptcies to see which ones are applicable to you. You should talk with a specialized lawyer to find out exactly what you need to do.
Harris Smith is a personal finance writer interested in home equity line of credit Don’t Miss Out!