It is a given fact that bankruptcy is the worse thing that can happen to any homeowner. This has heavier impact on your credit score since this gives an impression that you are not capable to pay any loan amount that you may owe. Thus, lending companies would automatically deny your application once they found out that you have been bankrupt for once in your life.
Chapter Seven bankruptcies are the most common choice for many people. By filing under this chapter, you are given a clean start; all of the debt that you claim is wiped out. The debts that can be claimed must unsecured and certain assets, if you have any, can be liquidated to repay your debt, with the remaining balance erased. You cannot claim debts like student loans, judgments from an injury case, delinquent child support, or alimony payments. Individuals or businesses can file a Chapter Seven.
Bankruptcy no longer carries the social stigma it once did. It is often considered the mark of someone who had the guts to try and go it alone, but failed, through little of their own, (after all, it's the banks we now all love to blame!)
A court notification will be mailed to the creditors so they will be informed to stop collecting your payables and they are given 15 days to do this. Although this has negative effects on your credit standing but you are giving an impression that you are still sincere in paying off your debts. This will eventually help you clear your reputation as a delinquent payer.
There is also a chapter that is specifically designated for farmers and fishermen who use these means to support their family. In order to qualify for this chapter as a business, your company must be owned by a single family unit. For individuals, you must verify your occupation. Your total debt must not exceed certain limits and the ability to repay debts must be proven.
Anyone attending counselling must bring with them details of their income and assets, and their financial outgoings. They must also supply details of their creditors and amounts owed. This way the court can decide if the more popular chapter 7 bankruptcy is an option, or if in fact the debtor, albeit with a rearrangement of their debts under a chapter 13 bankruptcy, can afford to repay their debts over a period of time, usually 3-5 years. In this way the debtor does not escape the bulk of debt, and creditors get their money.
If you can't qualify for any chapter, you have other options. You can try a debt consolidation that gives you one payment you can afford. You can also contact your creditors to negotiate better payment terms. Both of these options can help you repay your debt in a manner that you can afford.
If you are on the process of thinking about the best option for you, consider bankruptcy instead of embracing foreclosure. If you are going to choose between the lesser evil, bankruptcy is the best choice. Though it is not a total guarantee that you will eventually eliminate these effects but it would still take time. Hence, you must be advised earlier to make use of it responsibly. If not, you will surely get drowned with your payables.