Bankruptcy and Foreclosure Law
Experiencing severe financial duress with the potential of losing your home or other assets can be one of the most stressful events you will ever have to face. In order to overcome this difficulty, you should seek the advice of experienced legal counsel.
When you make that initial call to a law firm that specializes in financial recovery, you may wish to be at least somewhat familiar with how bankruptcy and foreclosure work. If you already have this background information at your disposal, it will save you money and save your attorney time.
Becoming Familiar with Various Types of Bankruptcy Protection
A number of bankruptcy filing types may apply to your situation. Each protection is designed to work with specific sets of circumstances.
Chapter 7
Chapter 7 bankruptcy protection is intended for both businesses and individuals and uses asset liquidation to pay back debtors. Some or all assets may be deemed as exempt. If all are exempt, then a "no asset" determination is made at case closing. It takes a few months before the discharge is received in Chapter 7 cases.
Chapter 9
Chapter 9 bankruptcy protection is also referred to as “municipal bankruptcy” and assists towns and cities in financial restructure. This type of bankruptcy functions similarly to Chapter 11 described below.
Chapter 11
Chapter 11 bankruptcy protection is mostly for businesses that wish to pay off debts while staying in operation. This is done via a reorganization plan that is court-approved. A portion of the debts are a paid while others are discharged. The protection also grants certain permissions to the debtor to allow a more profitable business model. That is, permission to modify the scale of the company’s operations, to recover assets and to terminate leases and contracts.
Chapter 12
Chapter 12 bankruptcy protection is intended to give debt relief to fisherman and family farmers who have regular income. This type also allows business to continue while debts are repaid by way of a payment plan that is court-approved.
Chapter 13
Chapter 13 bankruptcy protection is ideal for individuals who possess a regular income source and are not qualified for Chapter 7. Generally, a proposal including a debt repayment period of three to five years is given by the debtor. Usually, the debtor keeps possession of assets and makes the agreed payments to the trustee who proceeds to disburse those monies to creditors. The debtor gains protection from further actions such as garnishments and lawsuits during the plan period.
Learning about Foreclosure Law
Each state has its own foreclosure laws in place and individuals who are facing foreclosure should seek specifics about their local state’s laws on the matter. Here is some general legal information on this subject.
Two Types of Foreclosure
Two types of foreclosure exist: non-judicial and judicial. Non-judicial foreclosures (also referred to as "power of sale" foreclosures) are handled on an auction basis. Judicial foreclosure is where a lender files a lawsuit in order to seize the property and sell it.
More Information
Seeking the advice of a qualified attorney on foreclosure is advisable. They can teach you about deficiency judgments, redemption rights, the tax issues that will be involved and what your options are legally to prevent foreclosure and recover from it.