What is Bankruptcy

What is Bankruptcy? How do I declare it? How to get loan for Bad Credit/Bankruptcy?
The word bankruptcy comes from the ancient Latin words: bancus meaning a bench or table and ruptus meaning broken. A bank originally referred to a bench that the earliest bankers used in public places to conduct their business. And when the business failed, a banker broke his bank to let the people know that he was no longer in business. From there, we get the word Bankruptcy meaning legal inability of an individual or corporation to fulfill their debts. 

Types of Bankruptcy proceedings:
• A filing under Chapter 7 is called liquidation which literally means that you sell off property in order cover as much of the debt as possible, but at the same time you will have enough of the property left over in order for you to start all over again financially. 
• Chapter 13 involves the rehabilitation of the debtor to allow him or her to use future earnings to pay off creditors.

Filing for Bankruptcy:
You are required to complete an approved counseling course within 6 months prior to filing. Once you have decided to file, the process of bankruptcy is as follows:

• A bankruptcy case begins with the filing of a petition and several forms with the bankruptcy court in your area. The forms contain lists of all your assets, debts, income, expenditures, as well as other personal background and financial information. In addition to these forms, you must also file a certificate of credit counseling and tax returns for the recent tax year.

• In a Chapter 7 case, the court will appoint a trustee to represent the interests of your creditors. About 30 days after the petition filing, you must attend a meeting of creditors with the trustee to answer questions regarding your assets, debts, and so forth. After the meeting, the trustee will sell your property and divide the proceeds among your creditors. The court then schedules a final hearing and discharges your debts. Once this is done, you no longer legally owe your creditors and they cannot collect any unpaid percentage from you. 

• In a Chapter 13 case, you must also file a workable payment plan for repaying your debts along with all the other forms as in Chapter 7. After approval by the bankruptcy court, you start sending payments directly to the chapter 13 trustee. The trustee then pays your creditors according to the terms of the court-approved plan. When you have repaid your creditors according to the plan, you will be discharged after a court hearing. While the plan is in effect, you are protected against any creditor actions.

After bankruptcy, you could still get credit or loans. A number of banks offer "secured" credit cards where a debtor puts up a certain amount of money in an account at the bank to guarantee payment. Usually the credit limit is equal to the security given and is increased as the debtor proves his or her ability to pay the debt. Two years after a bankruptcy, debtors are eligible for mortgage loans on equal terms like everyone. How much you can pay as down payment and whether you have a stable income will be the major criteria than the fact you filed bankruptcy in the past. Your bankruptcy stays on your credit report for 10 years. It becomes less significant the further in the past the bankruptcy is.