The purpose of the bankruptcy court is to determine whether you are, in fact, insolvent and unable to pay your debts. Your entire financial situation, including your assets, will be examined. If you filed for Chapter 7 or liquidation bankruptcy, but the court discovered a means for you to repay your debts, you will be approved for Chapter 13 bankruptcy. This form of bankruptcy permits the petitioner to repay his creditors in accordance with a repayment plan that is fair to both parties and based on the petitioner's ability to pay. All assets remain in the possession of the petitioner.
In contrast, if the court grants the Chapter 7 petition, all debts will be discharged. Although the petitioner is granted a fresh financial start, all of his assets will be transferred to a fiduciary who will be responsible for selling the assets and distributing the proceeds to all creditors. Nevertheless, certain debts must be paid even if the bankruptcy petition is granted. Included among these are student loans, child support, and taxes.
Since Chapter 7 and Chapter 13 bankruptcies have been discussed, you may be pondering which one is most appropriate for your situation. You are only permitted to file for liquidation once every seven years. Once the bankruptcy petition is authorized, your creditors can no longer assert a claim against your future earnings. In contrast, repayment plans for Chapter 13 should be between three and five years. Even if you have a plan to repay your debts over time, the bankruptcy will remain on your credit report. This could considerably affect your credit score, lowering it significantly.
Numerous lenders do not view bankruptcy as a reason to reject a loan application. In fact, some lenders will disregard this negative entry on your credit report and approve your loan application. However, this is subject to certain conditions. In most instances, the loan will have a limited credit line and interest rates that exceed industry standards. ""Because the loan will be secured by the property, it is said to be easier for people who have been declared bankrupt to apply for a housing loan than for a car or personal loan.""
" - https://www.affordablecebu.com/