If you have come to the solemn conclusion that there is just no way to pay off your debt, then you might feel like waving your white flag so to speak, and file for bankruptcy. While bankruptcy used to be talked about in whispers, this is a procedure that many consumers have had to face up to in the last three years. Filing for bankruptcy is the process where a consumer goes before the courts, and states that they aren't able to pay for their debts. The consumer brings their case before the courts, and they ask for their debts to be legally discharged, or re-arranged into a reasonable payment plan. There are several different chapters of bankruptcy, and when the consumer is filing bankruptcy, the type of discharge that they receive will depend upon a few factors.
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One of the factors that are taken into consideration when filing for bankruptcy, is who is filing. That is to say that a personal consumer will file a different approach to deal with their debt, then a corporation would. For example, the personal consumer would simply contact a bankruptcy attorney, and the process would begin. They would have to take a means test, which is a way for the attorney to get a baseline for what they are dealing with in their client. The attorney needs to know how much money the client makes per year, and what they can afford to pay. If the client is low income, then obviously the client won't be able to contribute to the repayment of debt, or the restructuring of debt.
In most cases, a private consumer finds when filing bankruptcy, that they will get all qualifying debt discharged. However, there are exceptions. For example, federal student loans can't be included in the bankruptcy. There are other types of debt that won't be discharged as well. The bankruptcy attorney will advise their clients as to the type of debt that will and won't be discharged. Also, the bankruptcy attorney will have to work with the client, when it comes to their real estate. If the client owns property, then the attorney will have to work with the client to protect their automatic stay rights.
An automatic stay is what helps protect the consumer when they file for bankruptcy. The Automatic stay means that debt collectors can't proceed with collection activities until the courts determine what will happen with the debt of the consumer. This doesn't set well with debt collectors and with mortgage companies. As such, they will file a motion in court to have the automatic stay order removed, so that they can proceed with collection activity, and with foreclosure.
However, when the client is filing bankruptcy, they can gain protection from this motion with the help of their bankruptcy lawyer. Debt and mortgage collection companies might try to "steamroll" over the consumer, but the bankruptcy lawyer will make sure that the client's rights are being protected, so that they can have a fighting chance to get back on their feet financially.
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