Bankruptcy Discharge is for Honest Debtors

The U.S. Bankruptcy Code, which was enacted in the late seventies, governs all bankruptcy cases with the federal laws. There is a set of rules that guides all bankruptcy courts. Bankruptcy cases also employ the state laws and rules. The objective of the Federal law is to make sure that all of the laws on the subject of bankruptcy are kept consistent in order that the bankruptcy process may continue benefiting debtors.

The bankruptcy code was significantly modified in the year 2005. A new bankruptcy law was passed, the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA). The changes were made as a way to lessen the volume of bankruptcy case filings under Chapter 7 of the U.S. Bankruptcy Code, and make debtors repay their debts even just a portion of them. The BAPCPA is advantageous for banks and credit card companies because it made filing a Chapter 7 bankruptcy case more difficult for debtors and so they file for Chapter 13 case instead.

There were many serial bankruptcy filings before the BAPCPA had taken effect. The Congress modified the old bankruptcy law because of that. There were dishonest people who stacked up their credit card debts, then declared bankruptcy to discharge them, and do the same things all over again. In order to prevent this cycle, the guidelines had to become more rigid.

One of the most significant additions in the bankruptcy process is the means test. The means test is intended to put a limit of income to be eligible to file for Chapter 7 case. The income of a bankruptcy filer will be compared to the median income of the state. The means test will likewise evaluate the debtor's earnings against expenses. Due to the additional requirements and more restrictive procedures, it became clear that one will need a Bankruptcy lawyer San Antonio when filing for bankruptcy.

In this technologically cutting edge time, to lie on one's bankruptcy petition is a bad idea. Bankruptcy trustees have a lot of resources to obtain private information about debtors. Filing for bankruptcy is meant to give a new financial start to the honest but unfortunate persons. Bankruptcy trustees will review the history of a house, property, or financial assets which had been transferred. As simple as checking on social media in the Internet will uncover personal information of a person. A case can be dismissed if the trustee finds out that the debtor omitted a property. There are even uncommon occasions when a bankruptcy trustee goes as far as looking for a property to verify if all assets have been declared by the debtor. The implications of lying in bankruptcy filing are often more severe than the troubles that caused the debtor file for bankruptcy to start with. 

Attempting to defraud creditors is damaging both to the debtor as well as his or her bankruptcy case. Bankruptcy cases are governed by the federal law and to be charged with fraud and perjury have severe effects.

Can Bankruptcy Eliminate Mortgage Lien And Arrears?

Chapter 7 and Chapter 13 bankruptcy are two types of personal bankruptcy. They vary in how they wipe out debt. Consequently, the effects of bankruptcy on a mortgage loan vary.

Mortgage loans are complicated legal agreements. They are a lot more than just an assurance to repay a loan. For this reason, filing for bankruptcy will not discharge mortgage debt while allowing you to keep the property. However, you may be able to stop a property foreclosure or repossession through the bankruptcy process.

There are two parts of a mortgage contract. The first part of the deal is a promissory note to which a borrower formally makes a promise to repay the amount of money borrowed under the terms given. The other aspect of the deal is a deed of trust, called security instrument. If ever a borrower fails to satisfy the conditions of a mortgage loan agreement, the lender is allowed to take action against the secured home or property of a borrower.

Bankruptcy will wipe out your legal responsibility on a promissory note. However, this does not mean that you can keep your house or property despite of unpaid mortgage. A mortgage cannot be discharged in any kind of bankruptcy cases.

A Chapter 7 bankruptcy may eliminate an accountability to pay off a mortgage loan. You will never be sued for a mortgage deficiency in a Chapter 7 bankruptcy. In foreclosure, a deficiency judgment is a court ruling which makes you accountable to a mortgage loan balance when a property's price is not enough to pay for a mortgage loan. Without bankruptcy, you could be sued by your mortgage lender for your debt. A Chapter 7 bankruptcy may also remove an existing deficiency judgment.

On the other hand, filing for a Chapter 13 bankruptcy will not remove a mortgage lien or your obligation on a mortgage loan. This is because you will be required to repay some or all debts in a Chapter 13 procedure. Long-term financial obligations, like mortgage loans, are often excluded in a Chapter 13 repayment plan. This implies that any debts associated with a mortgage loan will not be wiped out in a Chapter 13 bankruptcy. However, you can cure mortgage arrears using Chapter 13 bankruptcy. Under the current bankruptcy laws, bankruptcy can cure mortgage arrears. Bankruptcy laws may even give protection against a property foreclosure or repossession. This does not mean, however, that when a mortgage debt becomes part of a repayment plan the mortgage lien is eliminated. A creditor can still go forward with property foreclosure or repossession if you do not make the payments according to the repayment plan.

In bankruptcy law, things are not always what they seem. A typical cause of confusion among bankruptcy filers concerns what will happen to secured debts that have liens against property they owned after a debt discharge is granted. To make sure that you understand the laws before you file bankruptcy, you should get advice from an experienced San Antonio Bankruptcy Lawyer.