Bankruptcy Alternatives

Bankruptcy record remains on your credit reports for 7-10 years, depending upon the type of bankruptcy you have been granted. So, even though this method is meant to provide the debtor a chance to make a fresh start of his/her financial life, a bankrupt person has to face an array of difficulties in his/her personal, professional, and financial life. That is the reason it is always wise to try alternative strategies in order to avoid bankruptcy. There are plenty of things that you can do in this regard. This section is your best resource on bankruptcy alternatives.

Bankruptcy Basics

Filing a petition to become bankrupt is a complex process because the laws that regulate these types of cases are very complicated. Even though you are taking help from an expert lawyer, you are strongly recommended to have good knowledge at least about the basic things involved with the process of bankruptcy. This section will educate you on how to plan properly before you file your petition, how to decide if bankruptcy is the right option for you, what options are available, which chapter you qualify to file your petition under, and an array of other such things.

Bankruptcy Exemptions

The federal and state laws significantly vary from each other when it comes to dealing with bankruptcy exemptions. Some specific assets might be allowed to be exempted in a particular state while another state may not allow you to keep it. Things may depend very much on which state you live in. Awareness of the legal provisions applicable in this regard is the key to put yourself in a comfortable position where you may be able to get most of your assets and properties under bankruptcy exemptions. This is a must visit section for you if you do not want to lose your home or car after getting bankrupt.

Bankruptcy Laws

Considering the rising number of bankruptcy cases, the bankruptcy laws are getting tougher and tougher with every passing year. Knowledge about these laws will help you make an informed decision. In order to ensure a fair judgment and to make sure that your legal rights are well protected, you must know how the laws work in these types of cases. Though the US bankruptcy code is widely available over Internet, but considering the kind of technical language it uses, people often do not understand what they are reading. This section explains everything in simple language, educating you about your legal rights and how to make the best use of the laws in your favor.

Filing Bankruptcy

It is not always a voluntary filing. If you are unable to pay your debts and are missing your monthly payments for several months, your creditors may also file a petition requesting the court to declare you as bankrupt. In these cases, it is termed as involuntary filing. Therefore, if you are caught in a serious debt trap, you must visit this section to know about the different aspects associated with bankruptcy filing.

Life after Bankruptcy

Life after bankruptcy does not necessarily always have to be bad. If you follow the right approach, you can always put things back on track. This section will provide you extensive information on how you can rebuild your credit, qualify for low rate loans, get mortgage, get better employment opportunities, and an array of other such things. This section does not include quick fixes; it provides you practical information on how consistent efforts can be converted into a smooth financial life even after you go bankrupt.

Current Sale Value

There are several factors that are taken into account when it comes to evaluating assets that you are claiming as exempt, such as its age and current condition. That is the reason properties under bankruptcy exemptions are always valued at their current sale value. The sale value can be estimated by comparing the value of similar used products in consignment shops and auction stores. You can even contact these stores and request them to provide you an estimate for the goods claimed as exempt.

Quick Sale Value

If it is a real estate property, you should try to find out its “quick sale value”, the price you will get if you sell it within a week. You will obviously try to negotiate as high a price as possible. That’s not a problem as long as you are fair in your estimates. The trustee who has been appointed to deal with the liquidation process of your assets will accept a “fair” quick sale price for your home claimed in bankruptcy exemptions, which is the net value after deducting repair costs, closing costs, and commissions. You can use the services of a professional real estate appraiser for this purpose. The trustee is very much likely to accept the estimates provided by a licensed appraiser.

Properties Subject to a Lien or a Mortgage

When it comes to evaluating assets and properties that are subject to a lien or a mortgage, only the equity value is taken into account in order to determine the limits for bankruptcy exemptions. The formula to calculate equity value is very simple. You first have to get the current sale value of the asset and then deduct the amount of liens or mortgages from it.

Prorated Equity

When it comes to the valuation of co-owned assets, their prorated equity is taken into consideration. For example, if it is a boat and you own only one-third of the interest in it, only your share of equity will be considered to determine the exemption limit.

The estimate you provide is thoroughly reviewed by the trustee appointed by the court. Therefore, you are strongly recommended to follow the concept of maximum disclosure and fair evaluation while you are estimating the value of bankruptcy exemptions. If the trustee finds you guilty of hiding certain assets or evaluating the same in a way that is unfair, criminal charges may be filed against you.