What Does Bankrupt Mean?
What does bankrupt mean? And and what is bankruptcy?
Here's the simple, easy to
understand, definition...
“Bankrupt” simply means that a person (or business) is no longer able to pay their debts and has filed with the Federal Bankruptcy Court for protection from debtors.
Here's the “bankrupt” definition according to Mirriam-Webster...
“a person judicially declared subject to having his or her estate administered under the bankrupt laws for the benefit of creditors”.
More on exactly what that means below.
If you're considering bankruptcy call us now for a free consultation...
Or fill out the form below now...
More On The Meaning Of Bankrupt
Once bankruptcy is filed, all the banks and others that you owe money to can no longer call you with threatening phone calls or hassle with with ugly letters.
When you go bankrupt your debts may be eliminated or restructured...depending on your individual situation AND what kind of bankruptcy you file. In the law books this is referred to as LIQUIDATION or REORGANIZATION.
For instance, let's say you have two car payments...
The courts may order that you sell one of your cars (liquidation) and allow you to keep the second car, provided you can make the payments. Your payments and loan may be changed to help you afford it (reorganization).
OR...If you're currently working and have a generous income you may not be required to liquidate anything.
Don't bust your piggy bank just yet...
Liquidate With A Chapter 7 Bankruptcy OR Reorganize With A Chapter 13
If some liquidation is required, you'll likely find that your bankruptcy lawyer will recommend a Chapter 7 bankruptcy. Some, or all, of your stuff (assets) may be liquidated.
However, if your personal situation doesn't require any liquidation (nothing has to be sold) your attorney will probably recommend a Chapter 13 bankruptcy.
In bankruptcy you still have to pay your debts if possible...
Don't make the mistake of thinking all your debts will go away but you get to keep your stuff. That's not how it works. You either continue to pay your debtors OR you sell your assets and give the money to the bank.
So...
What Does Bankrupt Mean???
In a nutshell, it means...
- You can't pay your bills.
- You hire a bankruptcy lawyer to help you get some stuff sold and/or restructure all your debt so it's easier to make the payments.
If you're not sure if you qualify for bankruptcy or not give us a call and we'll be happy to answer your questions free.
What Does Bankrupt Mean: Chapter 7?
Some of the details regarding going bankrupt with a Chapter 7 bankruptcy:
Again, a Chapter 7 bankruptcy will likely include some liquidation of your assets. The money will be given to your debtors to pay for the debt.
If you have “unsecured” debt like credit cards or personal loans from your bank, you may not have to pay them back...those debts might be erased.
The state of California will usually let you keep necessary assets like clothing, furniture, appliances, and a car. After all, you still need to get back and forth to work so you can get your financial life back on track.
For debts that are “secured” (something is being held as collateral) you might get to choose how the item is handled in the bankruptcy.
For example, if you're making payments on a car you may choose to...
- Let the bank repossess it.
- Ask the bank to lower the amount owed and pay it off completely (if you have some cash available).
- Or keep making the payments (you might be able to get the bank to lower the payment amount).
A Chapter 7 filing usually takes anywhere from 3 months to 6 months to complete.
If you'd like to learn more about how a bankruptcy will affect your personal situation talk to a qualified Bakersfield bankruptcy lawyer here...(661) 230-7900.
Chapter 7 bankruptcy is not for everyone...
If you have a decent income or a stack of cash in the bank, you may not qualify. You can probably still qualify for Chapter 13 though.
Or, after talking to us, you may decide that you don't even need to file at all. there are other options to bankruptcy.
Chapter 7 will probably not allow you to ignore any spousal or child support or taxes owed. But it may wipe out your medical bills, unsecured bank loans, and credit cards. Nice!
And, for sure, it will keep the collectors from hassling you.
What Does Bankrupt Mean: Chapter 13?
What does bankrupt mean?... Chapter 13 bankruptcy requires that your current debt be REORGANIZED so it's easier to pay.
This is for people who are making money...wage earners. In fact, Chapter 13 is often called the “Wage Earners Bankruptcy”.
What's Your Repayment Plan:
The government is going to want to know how you're planning to pay your debts over the next 3 to 5 years. Your bankruptcy lawyer will help you develop the plan and get it submitted to the proper agency.
After some number crunching to figure out your current financial situation (income and expenses), your lawyer will determine...
- The amount your unsecured creditors would get if you'd filed Chapter 7 instead.
- How much you owe your creditors.
- How much you are earning.
...all this info will determine the minimum amount you'll need to pay each creditor.
How Much Debt Is Allowed?
The federal government sets limits on the amount of debt you can have and still file Chapter 13.
- Your unsecured debt may not be higher than $383,175.
- Your secured debt may not be higher than $1,149,525.
Avoiding Foreclosure and Repossession
Late on your payments but want to keep your house and car...and anything else that can be repossessed?
Going bankrupt under Chapter 13 will allow you to keep your property while slowly getting caught up on these overdue payments.
What does bankrupt mean?
Final Thoughts
So, now you know the basic answer to, “What does bankrupt mean?”
- Bankruptcy means getting relief from your debt.
- Bankruptcy means getting help from the federal government and getting your finances in order.
- Bankruptcy means getting some, and maybe all, your debt wiped out.
- Bankruptcy can also mean paying all your creditors back but just taking a little longer to do it than you at first expected.
- Bankruptcy might mean selling your house, car and other possessions so that your creditors can get some of their money back.
It's important to talk to a qualified and experience Bakersfield bankruptcy lawyer to discuss your individual situation and needs...every person and every situation is different.
Call (661) 230-7900 now or fill out the form on this page.
