Bankruptcy is a legally declared inability of a person or company to pay their obligations towards the lenders. Bankruptcy is filed if someone fails to payback the loans taken from the creditors. Bankruptcy laws are formulated so that assets of the debtor can be easily dissolved among the creditors. These laws are backed and enforced by the state. Basic purpose is to support a debtor and to help him in paying off his debts in a convenient way as well as to provide some kind of security to the creditors. But it’s not an easy way for the debtor as he is going to lose his properties.
Bankruptcy is a forced action normally, however sometimes debtor also applies for it. When there is a total disappointment from every side and there is no way to get rid of debt. Sometimes the debtor himself files a bankruptcy. Once you approach an attorney to file the petition, he will require the data pertaining to your assets and liabilities along with the list of lenders. He will have a deep look into it and checks whether there is some other way to solve the problem. However if bankruptcy is the only solution left with you your lawyer can make the job easier for you.
There are two types of bankruptcy. One is a chapter 7 bankruptcy in which you apply for the liquidation of all your assets and the other is chapter 13 bankruptcy. The debtor applies for chapter 13 bankruptcy if he/she owns some asset and wishes to keep it. Under chapter 13 it’s tried to make some settlement amongst the creditors so that they allow you to pay off the debt at some easier conditions. But for that the previous record matters a lot.
Bankruptcy loans can also provide an alternative to rebuild yourself. Such loans are usually available to you when you when the bankruptcy petition has dismissed and you have over and done with your previous debts. Markup is high because of the poor credit history but still you can get a chance to start a fresh life if a careful decision is made. In chapter 7 bankruptcy the debtor have to wait for two years after the dismissal of case before you can apply for the loan. While in chapter 13 bankruptcy, debt should be fully paid off in order to apply for a loan.
A bankruptcy loan can proved to be a make or break option for you. With this loan you can avail your second chance but the decision should be very careful. Some companies may offer a loan while the bankruptcy is already underway. But such loans can be proved as disaster for you’ll as you might end up having another creditor.